SELECTED  CASES 


IN 


CONSTITUTIONAL    LAW 


BY 

H.    EDGAR    BARNES 

n 

AND 

BYRON    A.    MILNER 

Members  of  the   Philadelphia  Bar  and  Lecturers  in  the 
University  of  Pennsylvania 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 


COPYRIGHT   1910 

BY 
H.  EDGAR  BARNES  AND  BYRON  A.  MILNEP 

'  i  I  \> 


COPYRIGHT   1911 

BY 
H.  EDGAR  BARNES  AND  BYRON  A.  MILKER 


COPYRIGHT   1912 

BY 
H.  EDGAR  BARNES  AND  BYRON  A.  MILNER 


COPYRIGHT   1913 

BY 

H.  EDGAR  BARNES  AND  BYRON  A.  MILNER 


COPYRIGHT  1914 

BY 
H.  EDGAR  BARNES  AND  BYRON  A.  MILNER 


UOPYKTGHt 

BY 
H.  EDC.AP.  B  \PNES  AND  BYRQN  A.  MILNER 


. ' 


BARNES  &  MILNER 

PUBLISHERS 

1318  REAL  ESTATE  TRUST  BUILDING 
PHILADELPHIA.  PA. 

PRINTED    BY 

LYON  &  ARMOR 


This  volume  contains  a  collection  of  cases  intended  primarily  for 
the  use  of  students  in  the  study  of  Government  and  Constitutional 
Law.  For  some  years,  the  compilers  have  used  the  standard  text 
books  on  Government  in  teaching  these  subjects,  and  after  careful 
consideration,  finally  came  to  the  conclusion  that  better  results  were 
obtained  by  use  of  the  Case  Book  method. 

The  opinions  of  the  United  States  Supreme  Court  not  only  offer 
instructive  and  interesting  reading,  but  are  the  best  and  most  authori- 
tative treatises  upon  the  interpretation  of  the  Constitution  and  the 
definition  of  the  extent  of  State  and  Federal  power.  The  facts  of 
the  cases  present  real  problems  which  have  actually  come  before 
the  Courts  for  consideration  and  solution.  We  are  convinced  that 
when  a  principle  of  Constitutional  Law  is  coupled  with  the  actual 
facts  of  a  case,  the  student  not  only  more  readily  comprehends  it, 
but  retains  it  longer  in  his  memory. 

If  the  student  is  referred  to  the  original  reports  of  cases,  he  will 
find  difficulty  in  grasping  the  meaning  of  them  because  of  the  great 
amount  of  technical  detail.  The  compilers  have  made  a  careful 
selection  of  the  leading  cases  on  the  great  constitutional  questions, 
including  the  more  important  recent  decisions  of  the  Supreme  Court. 
The  endeavor  has  been  to  present  a  concise  statement  of  the  facts 
of  each  case,  and  to  include  those  portions  of  the  opinion  of  the 
Court,  which  bear  upon  the  principle  of  Constitutional  Law  under 
consideration.  Matters  of  pleading  and  unimportant  technical  detail 
have  been  eliminated.  The  cases  are  in  many  instances  annotated 
by  explanatory  matter  and  notes,  and  there  have  been  included  in 
the  Appendix  the  important  State  and  Federal  statutes  mentioned 
in  the  cases,  as  well  as  other  statutes  of  interest  to  the  student,  such 
as  the  Federal  Trade  Commission  Act,  the  Clayton  Act  and  Income 

Tax  Law. 

H.  EDGAR  BARNES, 

BYRON  A.  MILNER. 
Philadelphia,  Pennsylvania, 


882932 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 


Fable  of  Contents 


PAGE. 

Index  to  Cases 7 

Index  to  Statutes 8 

Constitution  of  the  United  States 9 

CHAPTER  I. 

THE  EXECUTIVE  DEPARTMENT. 

Section  1.     The  President's  Power  of  Appointment 23 

Section  2.     The    President's    Diplomatic    and    Treaty-Making 

Powers    28 

Section  3.     The  President's  Executive  Power 30 

Section  4.     The  President's  Pardoning  Power 37 

Section  5.     The  President's  Military  Power 40 

CHAPTER  II. 
THE  LEGISLATIVE  DEPARTMENT. 

Section  1.     Power  of  Congress  Over  Taxation 44 

Sub-Section  A.     Extent  of  the  Federal  Power....  44 

Sub-Section  B.     Limitation  of  State  Power 50 

Sub-Section  C.     Direct  and  Indirect  Taxes 56 

Section  2.     Power  of  Congress  Over  Commerce 72 

Sub- Section  A.     Extent  of  the  Federal  Power 72 

1.  In  General 72 

2.  The  Meaning  of  Commerce 85 

3.  When  Commerce  is  Interstate  or  Foreign. . .  92 

4.  Meaning  of  the  Sherman  Anti-Trust  Law ...  98 

5.  The  Criminal  Section  of  the  Sherman  Anti- 

Trust  Act  .  ,   138 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  5 

PAGE. 

6.  The    Federal    Taxing    Power    as    Affecting 

Commerce    143 

7.  The  Federal  Police  Power  as  Affecting  Com- 

merce    147 

8.  The  Patent  and  Copyright  Clause  as  Affecting 

Commerce  and  Price  Fixing 153 

Sub-Section  B.     Extent  of  the  Power  of  the  States 

Over  Commerce  166 

1.  The  State  Taxing  Power  as  Affecting  Com- 

merce   166 

2.  The  State  Police  Power  as  Affecting  Com- 

merce    192 

Section  3.     Power  of  Congress  Over  the  Currency. 221 

Section  4.     The  War  Power  of  Congress 235 

Section  5.     The  Power  of  Congress  Over  the  Territories 237 

Sub-Section  A.     The  Insular  Tariff  Cases 237 

Sub-Section  B.     The   Extension   of   the    Constitu- 
tion to  the  Territories 244 

Section  6.     The  Implied  Powers  of  Congress 249 

Sub- Section  A.     The  Exclusion  of  Foreigners....  249 

Sub-Section  B.     The  Right  of  Eminent  Domain..  251 
Sub-Section  C.     The    Power   to    Make   All    Laws 
Necessary  and   Proper  for  Carrying  into 

Execution  the  Enumerated  Powers 253 

Section  7.     Restrictions  on  the  Power  of  Congress 253 

Sub-Section  A.     The  Bill  of  Rights 253 

Sub-Section  B.     Meaning  of  Ex-Post-Facto  Laws.  257 

CHAPTER  III. 
THE  JUDICIAL  DEPARTMENT. 

Section  1.     The  Jurisdiction  of  the  Supreme  Court 259 

Sub-Section  A.     Suits  Between  States 259 

Sub-Section  B.     Suits  Between  the  United  States 

and  a  State 262 

Section  2.     Suits  Against  a  State  by  One  of  Its  Own  Citizens.  .  265 

Section  3.     The  Law  Administered  by  the  Federal  Courts 268 

Section  4.     Power  of  the  Courts  to  Declare  an  Act  of  the  Leg- 
islature Null  and  Void. .                              ,  270 


6  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

CHAPTER  IV. 

CONSTITUTIONAL  GUARANTEES. 

PAGE. 
Section  1.     Trial  by  Jury 271 

Section  2.     Civil  Rights 273 

Section  3.     State  Laws  Impairing  the  Obligation  of  Contracts. .  275 
Section  4.     The  Equal  Protection  of  the  Laws 280 

Section  5.     Due  Process  of  Law  and  Its  Relation  to  the  Police 

Power 285 

Section  6.     The  Guarantee  of  a  Republican  Form  of  Govern- 
ment     302 

Section  7.     Other  Guarantees  .  .   306 


CHAPTER  V. 
STATE  COMITY. 

Section  1.     Full  Faith  and  Credit  Shall  Be  Given  to  the  Acts, 

Records  and  Judgments  of  Another  State  307 

Section  2.     Privileges  and  Immunities  of  Citizens 310 

Section  3.     Extradition  Between  States 311 

APPENDIX. 

Digest  of  Important  Federal  and  State  Statutes.     (See  index 
for  particular  statute.) 314 

. 

Table  of  Cases 

Page.  Page. 

Adams  Express  Co.  v.  Kentucky  Barbier  v.   Connolly 280 

(see  note)   339      Barren  v.  Baltimore 253 

Adams  Express  Co.  v.  Ohio  State  Bath  Tub  Trust  Case 158 

Auditor    182      Bauer  &  Cie  v.  O'Donnell 159 

Aim1'  v.  California  (see  note)...   170      Binghampton   Bridge  Case 277 

Athanasaw  v.  U.  S.  (see  note)..  338      Boston  Beer  Co.  v.  Mass 279 

Anthracite  Coal  Trust  Case 132  Bowman  v.   Chicago,  etc.,   Rwy. 

Austin  v.  Tennessee 200         Co.  (cited)   198 

Baltic  Mining  Co.  v.  Mass 190      Brown  v.  Maryland 166 

B.  &  O  R.  R.  Co.  v.  Interstate  C.  Browning  v.  Waycross  (see  note)   173 

C.  (see  note) 333      Calder   v.    Bull 257 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 


Page. 
Caldwell  v.  North  Carolina  (see 

note)     174 

California  v.   Central  Pacific  R. 

R.  Co 179 

Caminetti  v.  U.  S.  (see  note) 337 

Cash    Register    Co.    Case     (see 

note)     142 

Chae  Chang  Ping  v.  U.  S 249 

Champion  v.  Ames 91 

Chinese  Exclusion  Case 249 

Chisholm  v.  Georgia  (cited) 260 

Civil    Rights    Cases 273 

Cleveland,  C,  &  St.  L.  Ry.  Co.  v. 

Illinois  (see  note) 212 

Coez;.  Errol 92 

Collector  v.   Day 44 

Cooley  v.  Board  of  Wardens 194 

Corfield  v.  Coryell 310 

Corporation    Tax    Cases 69 

Cotton  Corner  Case 138 

Crutcher  v.  Kentucky  (cited)  ....  210 

Daniel   Ball,   The 94 

Dartmouth  College  v.  Woodward  275 

Debs,  In  re 34 

DeLima  v.  Bidwell 237 

Diggs  v.  U.  S.  (see  note) 337 

Dooley  v.  U.  S 243 

Downes  v.   Bidwell 240 

Eastern  States  Retail  Lum.  Deal- 
ers v.  U.  S.  (see  note) 137 

Employers'  Liability  Case 147 

Flint  v.  Stone  Tracy  Co 69 

Ford  Motor  Co.  v.  Union  Motor 

Sales  Co.  (see  note) 164 

Garland,   Ex.   parte 37 

German  Alliance  Ins.  Co.  v.  Lewis  292 

Gibbons  v.  Ogden 72 

Gloucester  Ferry  Co.  v.  Pennsyl- 
vania       97 

Gonzales  v.  Williams 247 

Grady  v.  Wisconsin 206 

Hanley  v.  Donoghue 307 

Hans  v.  Louisiana 265 

Hart  v.  Maryland  (see  note) 363 

Hawaii  v.  Mankichi 245 

Henry  v.  A.  B.  Dick  Co 153 

Hepburn  v.  Griswold 221 

Hoke  v.  U.  S.  (see  note) 338 

Holden  v.  Hardy 297 

Hopkins  v.  U.  S.  (see  note) 137 

Houston,  etc.,  Ry.  Co.  v.  U.  S...  218 

Hylton  v.  U.  S 56 

Income   Tax  Case 57 

Inheritance  Tax  Case 63 

Insular  Cases,  The 237 

International   Text   Book  Co.  v. 

Pigg 209 

Jones  v.  U.  S 28 

Julliard  v.  Greenman 232 

Kansas  City,  etc.,  _Ry.  v.  Drainage 

District    (see  note) 84 

Kellogg  Co.  v.  Buck  (see  note)  .   165 


Page. 

Kentucky  v.  Denniston 311 

Keystone  Watch  Case  (see  note)  164 

Kidd  v.  Pearson  (cited) 87 

Kiernan  v.  City  of  Portland  (see 

note)   306 

Knowlton  v.  Moore 63 

Knox  v.  Lee 222 

Kohlz;.  U.  S 251 

Lake  Shore  &  Mich.,  etc.,  Ry.  Co. 

v.  Ohio  (see  note) 211 

Legal  Tender  Cases 221 

Leisy  v.  Hardin 196 

License  Cases  (cited) 290 

Lumber  Dealers'  Ass'n  v.  U.  S. 

(see  note)    137 

Luther  v.  Borden 40 

McCray  v.  U.  S 143 

McCready  v.  Virginia 85 

<-M'Culloch  v.  Maryland 50 

M'Dermott  v.  Wisconsin 206 

Maine  v.  Grand  Trunk  Ry 180 

*-Marbury  v.  Madison 23 

Miles  Medical  Co.  v.  Park   (see 

note)    163 

Milligan,  Ex  parte 271 

Mineograph  Case   153 

Minnesota  v.  Barber 204 

Minnesota  Rate  Cases 212 

Mondon  v.  New  York,  N.  H.  & 

Hart.  R.  R.  Co 147 

Mormon  Church  v.  U.  S 244 

Mugler  v.  Kansas 285 

Munn  v.  Illinois 289 

National  Cash  Register  Case  (see 

note)   142 

Neagle,  In  re 30 

New  Hampshire  v.  Louisiana 259 

New  York  v.  Louisiana 259 

Noble  State  Bank  v.  Haskell....  300 
Northern  Securities  Co.  V.U.S..  105 
Northwestern  Fertilizing  Co.  v. 

Hyde  Park  298 

Oregon    Initiative    and   Referen- 
dum Cases    302 

Pacific  States  Telephone,  etc.,  Co. 

v.  Oregon 302 

Parker  v.  Davis 222 

Paul  v.  Virginia 90 

Pembina  Mining  Co.  v.  Penna..  187 
Penna.  v.  Wheeling,  etc.,  Bridge 

Co 83 

Pensacola    Tel.    Co.   v.   Western 

Union  Tel.  Co 77 

Pipe  Line  Cases 80 

Pollock    v.    Farmers'    Loan    and 

Trust  Co 57 

Price  Fixing  Cases 158 

Prize  Cases 235 

Pullman's     Palace     Car     Co.    v. 

Penna.    (cited)    183 

Rahrer,  In  re  (see  note) 1 

Rassmussen  v.  U.  S.  (see  note)  .  247 


heading  Co.  v.  U.  S  ............   132 

Robbins  v.  Shelby  County  Taxing 

District  ......................   170 

Sanatogen  Case,  The  ............  159 

Sault  Sainte  Marie  v.  Transit  Co. 
(see  note)   ....................     97 

Schoellenberger  v.  Penna  .......  201 

Shreveport  Rate  Case  ...........  218 

Simpson  v.  Shepard.  .  .  ..........  212 

Singer    Sewing   Machine    Co.   v. 

Birchell   (see  note)  ...........   174 

Smyth  v.  Ames  (cited)  .........  216 

South    Carolina    v.    U.    S.    (see 

note)    ........................     47 

S.  S.  White  Dental  Mfg.  Co.  v. 

Mass  ...............   .  .......   190 

Standard    Sanitary   Mfg.    Co.   v. 

US        .  .....       158 

Standard  Oil  Trust  Case  ........   112 


U.  S.  v.  Baltimore  &  Ohio  R.  R. 

Co.    (see  note)  ...............     47 

U  S.  v.  Bitty  (see  note)  .........  338 

U.  S.  v.  Johnson  (see  note)  .....  342 

U.  S.  v.  Kellogg  (see  note)  .....   165 

U.  S.  v.  Knight  Co  ..............  86 

U.  S.  v.  Lexington  Mill  and  Ele- 

vator  Co.  (see  note)  ..........  343 

U.  S.  v.  Ohio  Oil  Co  ............     80 

U.  S.  v.  Patterson  (see  note)  ....   142 

U.  S.  v.  Patten  ..................   138 

U.  S.  v.  Reading  Co  ............   132 

U.  S.  v.  Standard  Oil  Co  .......   112 

U.  S.  v.  Terminal  R.  R.  Ass'n  of 
TTS*  Louis  .....................   128 

U.S.*.  Texas.       .....  .......  262 

U.  S.  fr.  Trans-Missouri  Freight 


ft  S.  v  Union  Pacific  R.  R.  Co.  .   107 


White  Slave  Traffic  Cases  .......  337 

Tobacco  Trust  Case.  ..  .  .........   122  Williams  v.  Suffolk  Ins.  Co.  (cit- 

Umon  Pacific  Merger  Case  ......   107  e(n  ..........................     29 

Union  Pacific  R.  R.  Co.  v.  Pen-  Wilson  v.'  Blackbird  'Creek'  Marsh 

niston   .......................   178  £o  ...........................  192 

United  Shoe  Machinery  Co.  Case  140  Woodruff  v.  Parkham   (cited)  .  .  243 

U.  S.  v.  American  Tobacco  Co  .  .  .   122  Yick  Wo  v.  Hopkins  ............  282 

Index  to  Statutes 

Anti-Trust  Laws  .......................  .................  314 

Arbitration  Act  .........................................  327 

Blue  Sky  Law  ...........................................  359 

Clayton  Anti-Trust  Law  ..................................  319 

Commodities  Clause  .....................................  334 

Employers'  Liability  Act  ..................................  334 

Federal  Income  Tax  Law  ................................  352 

Federal  Trade  Commission  Act  ............................  315 

Food  and  Drugs  Act  ......................................  340 

Hours  of  Service  Act  ....................................  332 

Immigration  Law    ......................  ".  ................  346 

Income  Tax  Law  ........................................  352 

Jim  Crow  Law  of  Maryland  ..............................  363 

Judicial  Code  ...........................................  349 

Kansas  Blue  Sky  Law  of  1915  ............................  359 

Meat  Inspection  Act  .....  .  ................................  344 

National   Bank   Notes   and   Stock.     Statutes  permitting   State 

Tax  on  same  .........................................  56 

Oregon  Initiative,  Referendum  and  Recall  ..................  357 

Safety  Appliance  Act  .....................................  331 

Sherman  Anti-Trust  Act  ..................................  314 

Webb  Act  ..............................................  338 

White  Slave  Traffic  Act  ..................................  336 

Wilson  Act  (see  note)  ....................................  199 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 


Constitution  of  the  United  States 


We  the  people  of  the  United  States,  in  order  to  form  a  more  per- 
fect union,  establish  justice,  insure  domestic  tranquility,  pro- 
vide for  the  common  defence,  promote  the  general  welfare, 
and  secure  the  blessings  of  liberty  to  ourselves  and  our  pos- 
terity, do  ordain  and  establish  this  Constitution  for  the  United 
States  of  America. 

ARTICLE  I. 

SECTION  1.  All  legislative  powers  herein  granted,  shall  be  vested 
in  a  congress  of  the  United  States,  which  shall  consist  of  a  senate 
and  house  of  representatives. 

SEC.  2.  The  house  of  representatives  shall  be  composed  of  mem- 
bers chosen  every  second  year  by  the  people  of  the  several  states; 
and  the  electors  in  each  state  shall  have  the  qualifications  requisite 
for  electors  of  the  most  numerous  branch  of  the  state  legislature. 

No  person  shall  be  a  representative  who  shall  not  have  attained 
to  the  age  of  twenty-five  years,  and  been  seven  years  a  citizen  of 
the  United  States,  and  who  shall  not,  when  elected,  be  an  inhabitant 
of  that  state  in  which  he  shall  be  chosen. 

[Representatives  and  direct  taxes  shall  be  apportioned  among  the 
several  states  which  may  be  included  within  this  union,  according 
to  their  respective  numbers,  which  shall  be  determined  by  adding 
to  the  whole  number  of  free  persons,  including  those  bound  to  ser- 
vice for  a  term  of  years,  and  excluding  Indians  not  taxed,  three- 
fifths  of  all  other  persons.]1  The  actual  enumeration  shall  be  made 
within  three  years  after  the  first  meeting  of  the  congress  of  the 
United  States,  and  within  every  subsequent  term  of  ten  years,  in 
such  manner  as  they  shall  by  law  direct.  The  number  of  repre- 
sentatives shall  not  exceed  one  for  every  thirty  thousand,  but  each 
state  shall  have  at  least  one  representative,  and  until  such  enumer- 
ation shall  be  made,  the  state  of  New  Hampshire  shall  be  entitled 
to  choose  three,  Massachusetts  eight,  Rhode  Island  and  Providence 
Plantations  one,  Connecticut  five,  New  York  six,  New  Jersey  four, 
Pennsylvania  eight,  Delaware  one,  Maryland  six,  Virginia  ten, 
North  Carolina  five,  South  Carolina  five,  and  Georgia  three. 

When  vacancies  happen  in  the  representation  from  any  state,  the 
executive  authority  thereof  shall  issue  writs  of  election  to  fill  such 
vacancies. 


1  The  clause  included  in  brackets  is  amended  by  the  fourteenth  amendment, 
second  section. 


io  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

The  house  of  representatives  shall  choose  their  speaker  and  other 
officers  i  and  shall  have  the  sole  power  of  impeachment. 

SEC.  3.[  {The -senate  of  the  United  States  shall  be  composed  of 
two  senators  /rqm.each  state,  chosen  by  the  legislature  thereof,  for 
six  years;  ana  each  seaatar  shall  have  one  vote.]1 

Immediately  after  they  shall  be  assembled  in  consequence  of  the 
first  election,  they  shall  be  divided  as  equally  as  may  be  into  three 
classes.  The  seats  of  the  senators  of  the  first  class  shall  be  vacated 
at  the  expiration  of  the  second  year,  of  the  second  class  at  the 
expiration  of  the  fourth  year,  and  of  the  third  class  at  the  expira- 
tion of  the  sixth  year,  so  that  one-third  may  be  chosen  every  second 
year;  and  if  vacancies  happen,  by  resignation  or  otherwise,  during 
the  recess  of  the  legislature  of  any  state,  the  executive  thereof  may 
make  temporary  appointments  until  the  next  meeting  of  the  legis- 
lature, which  shall  then  fill  such  vacancies. 

No  person  shall  be  a  senator  who  shall  not  have  attained  to  the 
age  of  thirty  years,  and  been  nine  years  a  citizen  of  the  United 
States,  and  who  shall  not,  when  elected,  be  an  inhabitant  of  that 
state  for  which  he  shall  be  chosen. 

The  vice-president  of  the  United  States  shall  be  president  of  the 
senate,  but  shall  have  no  vote,  unless  they  be  equally  divided. 

The  senate  shall  choose  their  other  officers,  and  also  a  president 
pro  tempore,  in  the  absence  of  the  vice-president,  or  when  he  shall 
exercise  the  office  of  president  of  the  United  States. 

The  senate  shall  have  the  sole  power  to  try  all  impeachments. 
When  sitting  for  that  purpose  they  shall  be  on  oath  or  affirmation. 
When  the  president  of  the  United  States  is  tried,  the  chief  justice 
shall  preside;  and  no  person  shall  be  convicted  without  the  concur- 
rence of  two-thirds  of  the  members  present. 

Judgment  in  cases  of  impeachment  shall  not  extend  further  than 
to  removal  from  office,  and  disqualification  to  hold  and  enjoy  any 
office  of  honor,  trust,  or  profit,  under  the  United  States :  but  the 
party  convicted  shall  nevertheless  be  liable  and  subject  to  indict- 
ment, trial,  judgment  and  punishment,  according  to  law. 

SEC.  4.  The  times,  places,  and  manner  of  holding  elections  for 
senators  and  representatives,  shall  be  prescribed  in  each  state  by 
the  legislature  thereof;  but  the  congress  may  at  any  time  by  law 
make  or  alter  such  regulations,  except  as  to  the  places  of  choosing 
senators. 

The  congress  shall  assemble  at  least  once  in  every  year,  and  such 
meeting  shall  be  on  the  first  Monday  in  December,  unless  they 
shall  by  law  appoint  a  different  day. 

SEC.  5.  Each  house  shall  be  the  judge  of  the  elections,  returns, 
and  qualifications  of  its  own  members,  and  a  majority  of  each  shall 
constitute  a  quorum  to  do  business;  but  a  smaller  number  may 
adjourn  from  day  to  day,  and  may  be  authorized  to  compel  the 
attendance  of  absent  members,  in  such  manner,  and  under  such 
penalties  as  each  house  may  provide. 

1This  clause  included  in  brackets  is  amended  by  Seventeenth  Amendment. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  n 

Each  house  may  determine  the  rules  of  its  proceedings,  punish 
its  members  for  disorderly  behavior,  and,  with  the  concurrence  of 
two-thirds,  expel  a  member. 

Each  house  shall  keep  a  journal  of  its  proceedings,  and  from  time 
to  time  publish  the  same,  excepting  such  parts  as  may  in  their  judg- 
ment require  secrecy;  and  the  yeas  and  nays  of  the  members  of 
either  house  on  any  question,  shall,  at  the  desire  of  one-fifth  of  those 
present,  be  entered  on  the  journal. 

Neither  house,  during  the  session  of  congress,  shall,  without  the 
consent  of  the  other,  adjourn  for  more  than  three  days,  nor  to  any 
other  place  than  that  in  which  the  two  houses  shall  be  sitting. 

SEC.  6.  The  senators  and  representatives  shall  receive  a  compen- 
sation for  their  services,  to  be  ascertained  by  law,  and  paid  out  of 
the  treasury  of  the  United  States.  They  shall,  in  all  cases,  except 
treason,  felony,  and  breach  of  the  peace,  be  privileged  from  arrest 
during  their  attendance  at  the  session  of  their  respective  houses, 
and  in  going  to  and  returning  from  the  same ;  and  for  any  speech  or 
debate  in  either  house,  they  shall  not  be  questioned  in  any  other 
place. 

No  senator  or  representative  shall,  during  the  time  for  which  he 
was  elected,  be  appointed  to  any  civil  office  under  the  authority  of 
the  United  States,  which  shall  have  been  created,  or  the  emoluments 
whereof  shall  have  been  increased  during  such  time ;  and  no  person 
holding  any  office  under  the  United  States,  shall  be  a  member  of 
either  house  during  his  continuance  in  office. 

SEC  7.  All  bills  for  raising  revenue  shall  originate  in  the  house 
of  representatives;  but  the  senate  may  propose  or  concur  with 
amendments  as  on  other  bills. 

Every  bill  which  shall  have  passed  the  house  of  representatives 
and  the  senate,  shall,  before  it  become  a  law,  be  presented  to  the 
president  of  the  United  States;  if  he  approve  he  shall  sign  it,  but 
if  not,  he  shall  return  it,  with  his  objections,  to  that  house  in  which 
it  shall  have  originated,  who  shall  enter  the  objections  at  large  on 
their  journal  and  proceed  to  reconsider  it.  If,  after  such  reconsid- 
eration two-thirds  of  that  house  shall  agree  to  pass  the  bill,  it  shall 
be  sent,  together  with  the  objections,  to  the  other  house,  by  which 
it  shall  likewise  be  reconsidered,  and,  if  approved  by  two-thirds  of 
that  house,  it  shall  become  a  law.  But  in  all  such  cases,  the  votes 
of  both  houses  shall  be  determined  by  yeas  and  nays,  and  the 
names  of  the  persons  voting  for  and  against  the  bill,  shall  be 
entered  on  the  journal  of  each  house  respectively.  If  any  bill  shall 
not  be  returned  by  the  president  within  ten  days  (Sunday  excepted) 
after  it  shall  have  been  presented  to  him,  the  same  shall  be  a  law, 
in  like  manner  as  if  he  had  signed  it,  unless  the  congress  by  their 
adjournment  prevent  its  return,  in  which  case  it  shall  not  be  a  law. 

Every  order,  resolution,  or  vote,  to  which  the  concurrence  of  the 
senate  and  house  of  representatives  may  be  necessary  (except  on  a 
question  of  adjournment)  shall  be  presented  to  the  president  of  the 
United  States;  and  before  the  same  shall  take  effect,  shall  be  ap- 


12  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

proved  by  him,  or  being  disapproved  by  him,  shall  be  repassed  by 
two-thirds  of  the  senate  and  house  of  representatives,  according  to 
the  rules  and  limitations  prescribed  in  the  case  of  a  bill. 

SEC.  8.     The  congress  shall  have  power: — 

To  lay  and  collect  taxes,  duties,  imposts,  and  excises,  to  pay  the 
debts  and  provide  for  the  common  defence  and  general  welfare  of 
the  United  States ;  but  all  duties,  imposts,  and  excises  shall  be  uni- 
form throughout  the  United  States; 

To  borrow  money  on  the  credit  of  the  United  States ; 

To  regulate  commerce  with  foreign  nations,  and  among  the  several 
states,  and  with  the  Indian  tribes ; 

To  establish  an  uniform  rule  of  naturalization,  and  uniform  laws 
on  the  subject  of  bankruptcies  throughout  the  United  States; 

To  coin  money,  regulate  the  value  thereof,  and  of  foreign  coin, 
and  fix  the  standard  of  weights  and  measures ; 

To  provide  for  the  punishment  of  counterfeiting  the  securities, 
and  current  coin  of  the  United  States ; 

To  establish  post-offices  and  post-roads; 

To  promote  the  progress  of  science  and  useful  arts,  by  securing 
for  limited  times  to  authors  and  inventors  the  exclusive  right  to 
their  respective  writings  and  discoveries ; 

To  constitute  tribunals  inferior  to  the  supreme  court ; 

To  define  and  punish  piracies  and  felonies  committed  on  the  high 
seas,  and  offences  against  the  law  of  nations ; 

To  declare  war,  grant  letters  of  marque  and  reprisal,  and  make 
rules  concerning  captures  on  land  and  water ; 

To  raise  and  support  armies ;  but  no  appropriation  of  money,  to 
that  use,  shall  be  for  a  longer  term  than  two  years ; 

To  provide  and  maintain  a  navy ; 

To  make  rules  for  the  government  and  regulation  of  the  land  and 
naval  forces ; 

To  provide  for  calling  forth  the  militia  to  execute  the  laws  of 
the  union,  suppress  insurrections  and  repel  invasions ; 

To  provide  for  organizing,  arming,  and  disciplining,  the  militia, 
and  for  governing  such  part  of  them  as  may  be  employed  in  the  ser- 
vice of  the  United  States,  reserving  to  the  states  respectively,  the 
appointment  of  the  officers,  and  the  authority  of  training  the  militia 
according  to  the  discipline  prescribed  by  congress ; 

To  exercise  exclusive  legislation  in  all  cases  whatsoever,  over  such 
district  (not  exceeding  ten  miles  square)  as  may,  by  cession  of  par- 
ticular states,  and  the  acceptance  of  congress,  become  the  seat  of 
the  government  of  the  United  States,  and  to  exercise  like  authority 
over  all  places  purchased  by  the  consent  of  the  legislature  of  the 
state  in  which  the  same  shall  be,  for  the  erection  of  forts,  maga- 
zines, arsenals,  dock  yards,  and  other  needful  buildings ; — And 

To  make  all  laws  which  shall  be  necessary  and  proper  for  carry- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  13 

ing  into  execution  the  foregoing  powers,  and  all  other  powers  vested 
by  this  constitution  in  the  government  of  the  United  States,  or  in 
any  department  or  officer  thereof. 

SEC.  9.  The  migration  or  importation  of  such  persons  as  any  of 
the  states  now  existing  shall  think  proper  to  admit,  shall  not  be 
prohibited  by  the  congress  prior  to  the  year  one  thousand  eight 
hundred  and  eight;  but  a  tax  or  duty  may  be  imposed  on  such 
importation,  not  exceeding  ten  dollars  for  each  person. 

The  privilege  of  the  writ  of  habeas  corpus  shall  not  be  suspended, 
unless  when,  in  cases  of  rebellion  or  invasion,  the  public  safety 
may  require  it. 

No  bill  of  attainder  or  ex  post  facto  law,  shall  be  passed. 

No  capitation,  or  other  direct,  tax  shall  be  laid,  unless  in  propor- 
tion to  the  census  or  enumeration  hereinbefore  directed  to  be  taken. 

No  tax  or  duty  shall  be  laid  on  articles  exported  from  any  state. 

No  preference  shall  be  given  by  any  regulation  of  commerce  or 
revenue  to  the  ports  of  one  state  over  those  of  another;  nor  shall 
vessels  bound  to  or  from  one  state  be  obliged  to  enter,  clear,  or  pay 
duties  in  another. 

No  money  shall  be  drawn  from  the  treasury,  but  in  consequence 
of  appropriations  made  by  law ;  and  a  regular  statement  and  account 
of  the  receipts  and  expenditures  of  all  public  money  shall  be  pub- 
lished from  time  to  time. 

No  title  of  nobility  shall  be  granted  by  the  United  States;  and 
no  person  holding  any  office  of  profit  or  trust  under  them,  shall, 
without  the  consent  of  the  congress,  accept  of  any  present,  emolu- 
ment, office,  or  title,  of  any  kind  whatever,  from  any  king,  prince, 
or  foreign  state. 

SEC.  10.  No  state  shall  enter  into  any  treaty,  alliance,  or  confed- 
eration; grant  letters  of  marque  and  reprisal;  coin  money;  emit 
bills  of  credit;  make  anything  but  gold  and  silver  coin  a  tender  in 
payments  of  debts ;  pass  any  bill  of  attainder ;  ex  post  facto  law,  or 
law  impairing  the  obligation  of  contracts,  or  grant  any  title  of 
nobility. 

No  state  shall,  without  the  consent  of  the  congress,  lay  any  im- 
posts or  duties  on  imports  or  exports,  except  what  may  be  absolutely 
necessary  for  executing  its  inspection  laws;  and  the  net  produce 
of  all  duties  and  imposts,  laid  by  any  state  on  imports  or  exports, 
shall  be  for  the  use  of  the  treasury  of  the  United  States;  and  all 
such  laws  shall  be  subject  to  the  revision  and  control  of  the  con- 
gress. No  state  shall,  without  the  consent  of  congress,  lay  any 
duty  of  tonnage,  keep  troops  or  ships  of  war  in  time  of  peace,  enter 
into  any  agreement  or  compact  with  another  state  or  with  a  foreign 
power,  or  engage  in  war,  unless  actually  invaded,  or  in  such  immi- 
nent danger  as  will  not  admit  of  delay. 

ARTICLE  II. 

SECTION  1.  The  executive  power  shall  be  vested  in  a  president 
of  the  United  States  of  America.  He  shall  hold  his  office  during  the 


14  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

term  of  four  years,  and,  together  with  the  vice-president,  chosen 
for  the  same  term,  be  elected  as  follows : — 

Each  state  shall  appoint,  in  such  manner  as  the  legislature  thereof 
may  direct,  a  number  of  electors,  equal  to  the  whole  number  of 
senators  and  representatives  to  which  the  state  may  be  entitled  in 
the  congress :  but  no  senator  or  representative  or  person  holding  an 
office  of  trust  or  profit  under  the  United  States,  shall  be  appointed 
an  elector. 

[The  electors  shall  meet  in  their  respective  states,  and  vote  by 
ballot  for  two  persons,  of  whom  one  at  least  shall  not  be  an  inhabi- 
tant of  the  same  state  with  themselves.  And  they  shall  make  a  list 
of  all  the  persons  voted  for,  and  of  the  number  of  votes  for  each; 
which  list  they  shall  sign  and  certify,  and  transmit  sealed  to  the 
seat  of  the  government  of  the  United  States,  directed  to  the  president 
of  the  senate.  The  president  of  the  senate  shall,  in  the  presence  of 
the  senate  and  house  of  representatives,  open  all  the  certificates,  and 
the  votes  shall  then  be  counted.  The  person  having  the  greatest 
number  of  votes  shall  be  the  president,  if  such  number  be  a  majority 
of  the  whole  number  of  electors  appointed;  and  if  there  be  more 
than  one  who  have  such  majority,  and  have  an  equal  number  of 
votes,  then  the  house  of  representatives  shall  immediately  choose, 
by  ballot,  one  of  them  for  president;  and  if  no  person  have  a 
majority,  then  from  the  five  highest  on  the  list,  the  said  house  shall, 
in  like  manner,  choose  the  president.  But  in  choosing  the  presi- 
dent, the  votes  shall  be  taken  by  states,  the  representation  from 
each  state  having  one  vote ;  a  quorum  for  this  purpose  shall  consist 
of  a  member  or  members  from  two-thirds  of  the  states,  and  a 
majority  of  all  the  states  shall  be  necessary  to  a  choice.  In  every 
case,  after  the  choice  of  the  president,  the  person  having  the  great- 
est number  of  votes  of  the  electors  shall  be  the  vice-president.  But 
if  there  should  remain  two  or  more  who  have  equal  votes,  the  senate 
shall  choose  from  them,  by  ballot,  the  vice-president.]1 

The  congress  may  determine  the  time  of  choosing  the  electors, 
and  the  day  on  which  they  shall  give  their  votes ;  which  day  shall  be 
the  same  throughout  the  United  States. 

No  person  except  a  natural-born  citizen,  or  a  citizen  of  the  United 
States  at  the  time  of  the  adoption  of  this  constitution,  shall  be 
eligible  to  the  office  of  president ;  neither  shall  any  person  be  eligible 
to  that  office  who  shall  not  have  attained  to  the  age  of  thirty-five 
years,  and  been  fourteen  years  a  resident  within  the  United  States. 

In  case  of  the  removal  of  the  president  from  office,  or  of  his 
death,  resignation,  or  inability  to  discharge  the  powers  and  diaries 
of  the  said  office,  the  same  shall  devolve  on  the  vice-president,  and 
the  congress  may  by  law  provide  for  the  case  of  removal,  death, 
resignation,  or  inability,  both  of  the  president  and  vice-president, 
declaring  what  officer  shall  then  act  as  president,  and  such  officer 
shall  act  accordingly,  until  the  disability  be  removed,  or  a  president 
shall  be  elected. 


1  This  clause  has  been  superseded  by  the  twelfth  amendment. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  15 

The  president  shall,  at  stated  times,  receive  for  his  services  a 
compensation,  which  shall  neither  be  increased  nor  diminished 
during  the  period  for  which  he  shall  have  been  elected,  and  he  shall 
not  receive  within  that  period  any  other  emolument  from  the  United 
States  or  any  of  them. 

Before  he  enter  on  the  execution  of  his  office,  he  shall  take  the 
following  oath  or  affirmation : — 

"I  do  solemnly  swear  (or  affirm)  that  I  will  faithfully  execute  the 
office  of  president  of  the  United  States,  and  will,  to  the  best  of  my 
ability,  preserve,  protect,  and  defend  the  constitution  of  the  United 
States." 

SEC.  2.  The  president  shall  be  commander-in-chief  of  the  army 
and  navy  of  the  United  States,  and  of  the  militia  of  the  several 
states,  when  called  into  the  actual  service  of  the  United  States;  he 
may  require  the  opinion  in  writing  of  the  principal  officer  in  each 
-f  the  executive  departments,  upon  any  subject  relating  to  the 
Huties  of  their  respective  offices;  and  he  shall  have  power  to  grant 
reprieves  and  pardons  for  offences  against  the  United  States,  except 
in  cases  of  impeachment. 

He  shall  have  power,  by  and  with  the  advice  and  consent  of  the 
senate,  to  make  treaties,  provided  two-thirds  of  the  senators  present 
concur ;  and  he  shall  nominate,  and,  by  and  with  the  advice  and 
consent  of  the  senate,  shall  appoint  ambassadors,  other  public  min- 
isters and  consuls,  judges  of  the  supreme  court,  and  all  other  officers 
of  the  United  States,  whose  appointments  are  not  herein  otherwise 
provided  for  and  which  shall  be  established  by  law;  but  the  con- 
gress may  by  law  vest  the  appointment  of  such  inferior  officers  as 
they  think  proper,  in  the  president  alone,  in  the  courts  of  law,  or 
in  the  heads  of  departments. 

The  president  shall  have  power  to  fill  up  all  vacancies  that  may 
happen  during  the  recess  of  the  senate,  by  granting  commissions, 
which  shall  expire  at  the  end  of  their  next  session. 

SEC.  3.  He  shall  from  time  to  time  give  to  the  congress  informa- 
tion of  the  state  of  the  union,  and  recommend  to  their  consideration 
such  measures  as  he  shall  judge  necessary  and  expedient;  he 
may,  on  extraordinary  occasions,  convene  both  houses,  or  either  of 
them;  and  in  case  of  disagreement  between  them,  with  respect  to 
the  time  of  adjournment,  he  may  adjourn  them  to  such  time  as  he 
shall  think  proper.  He  shall  receive  ambassadors  and  other  public 
ministers ;  he  shall  take  care  that  the  laws  be  faithfully  executed, 
and  shall  commission  all  the  officers  of  the  United  States. 

SEC.  4.  The  president,  vice-president,  and  all  civil  officers  of 
the  United  States,  shall  be  removed  from  office  on  impeachment 
for,  and  conviction  of,  treason,  bribery,  or  other  high  crimes  and 
misdemeanors. 

ARTICLE  III. 

SECTION  1.  The  judicial  power  of  the  United  States  shall  be 
vested  in  one  supreme  court,  and  in  such  inferior  courts  as  the  con- 


1 6  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

gress  may,  from  time  to  time,  ordain  and  establish.  The  judges, 
both  of  the  supreme  and  inferior  courts,  shall  hold  their  offices 
during  good  behavior;  and  shall,  at  stated  times,  receive  for  their 
services  a  compensation  which  shall  not  be  diminished  during  their 
continuance  in  office. 

SEC.  2.  The  judicial  power  shall  extend  to  all  cases,  in  law  and 
equity,  arising  under  this  constitution,  the  laws  of  the  United 
States,  and  treaties  made,  or  which  shall  be  made,  under  their 
authority ;  to  all  cases  affecting  ambassadors,  other  public  ministers, 
and  consuls;  to  all  cases  of  admiralty  and  maritime  jurisdiction; 
to  controversies  to  which  the  United  States  shall  be  a  party ;  to 
controversies  between  two  or  more  states ;  between  a  state  and  citi- 
zens of  another  state;  between  citizens  of  different  states;  between 
citizens  of  the  same  state  claiming  lands  under  grants  of  different 
states,  and  between  a  state,  or  the  citizens  thereof,  and  foreign 
states,  citizens,  or  subjects. 

In  all  cases  affecting  ambassadors,  other  public  ministers  and 
consuls,  and  those  in  which  a  state  shall  be  a  party,  the  supreme 
court  shall  have  original  jurisdiction.  In  all  the  other  cases  before 
mentioned,  the  supreme  court  shall  have  appellate  jurisdiction,  both 
as  to  law  and  fact,  with  such  exceptions,  and  under  such  regulations 
as  the  congress  shall  make. 

The  trial  of  all  crimes,  except  in  cases  of  impeachment,  shall  be 
by  jury;  and  such  trials  shall  be  held  in  the  state  where  the  said 
crimes  shall  have  been  committed ;  but  when  not  committed  within 
any  state,  the  trial  shall  be  at  such  place  or  places  as  the  congress 
may  by  law  have  directed. 

SEC.  3.  Treason  against  the  United  States  shall  consist  only  in 
levying  war  against  them,  or  in  adhering  to  their  enemies,  giving 
them  aid  and  comfort.  No  person  shall  be  convicted  of  treason 
unless  on  the  testimony  of  two  witnesses  to  the  same  overt  act,  or 
on  confession  in  open  court. 

The  congress  shall  have  power  to  declare  the  punishment  of 
treason,  but  no  attainder  of  treason  shall  work  corruption  of  blood, 
or  forfeiture,  except  during  the  life  of  the  person  attainted. 

ARTICLE  IV. 

SECTION  1.  Full  faith  and  credit  shall  be  given  in  each  state  to 
the  public  acts,  records,  and  judicial  proceedings  of  every  other 
state.  And  the  congress  may,  by  general  laws,  prescribe  the  man- 
ner in  which  such  acts,  records,  and  proceedings  shall  be  proved, 
and  the  effect  thereof. 

SEC.  2.  The  citizens  of  each  state  shall  be  entitled  to  all  privi- 
leges and  immunities  of  citizens  in  the  several  states. 

A  person  charged  in  any  state  with  treason,  felony,  or  other 
crime,  who  shall  flee  from  justice,  and  be  found  in  another  state, 
shall,  on  demand  of  the  executive  authority  of  the  state  from  which 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  17 

he  fled,  be  delivered  up,  to  be  removed  to  the  state  having  jurisdic- 
tion of  the  crime. 

No  person  held  to  service  or  labor  in  one  state,  under  the  laws 
thereof,  escaping  into  another,  shall,  in  consequence  of  any  law  or 
regulation  therein,  be  discharged  from  such  service  or  labor,  but 
shall  be  delivered  up  on  claim  of  the  party  to  whom  such  service  or 
labor  may  be  due. 

SEC.  3.  New  states  may  be  admitted  by  the  congress  into  this 
union ;  but  no  new  state  shall  be  formed  or  erected  within  the 
jurisdiction  of  any  other  state;  nor  any  state  be  formed  by  the 
junction  of  two  or  more  states,  or  parts  of  states,  without  the  con- 
sent of  the  legislatures  of  the  states  concerned,  as  well  as  of  the 
congress. 

The  congress  shall  have  power  to  dispose  of,  and  make  all  needful 
rules  and  regulations  respecting  the  territory  or  other  property 
belonging  to  the  United  States;  and  nothing  in  this  constitution 
shall  be  so  construed  as  to  prejudice  any  claims  of  the  United 
States  or  of  any  particular  state. 

SEC.  4.  The  United  States  shall  guaranty  to  every  state  in  this 
union,  a  republican  form  of  government,  and  shall  protect  each  of 
them  against  invasion;  and  on  application  of  the  legislature,  or  of 
the  executive  (when  the  legislature  cannot  be  convened)  against 
domestic  violence. 

ARTICLE  V. 

The  congress,  whenever  two-thirds  of  both  houses  shall  deem  it 
necessary,  shall  propose  amendments  to  this  constitution,  or,  on  the 
application  of  the  legislatures  of  two-thirds  of  the  several  states, 
shall  call  a  convention  for  proposing  amendments,  which,  in  either 
case,  shall  be  valid  to  all  intents  and  purposes,  as  part  of  this  con- 
stitution, when  ratified  by  the  legislatures  of  three-fourths  of  the 
several  states,  or  by  conventions  in  three-fourths  thereof,  as  the  one 
or  the  other  mode  of  ratification  may  be  proposed  by  the  congress ; 
provided,  that  no  amendment,  which  may  be  made  prior  to  the  year 
one  thousand  eight  hundred  and  eight,  shall  in  any  manner  affect 
the  first  and  fourth  clauses  in  the  ninth  section  of  the  first  article; 
and  that  no  state,  without  its  consent,  shall  be  deprived  of  its  equal 
suffrage  in  the  senate. 

ARTICLE  VI. 

All  debts  contracted  and  engagements  entered  into,  before  the 
adoption  of  this  constitution,  shall  be  as  valid  against  the  United 
States,  under  this  constitution,  as  under  the  confederation. 

This  constitution,  and  the  laws  of  the  United  States  which  shall 
be  made  in  pursuance  thereof,  and  all  treaties  made  or  which  shall 
be  made  under  the  authority  of  the  United  States,  shall  be  the 
supreme  law  of  the  land :  and  the  judges  in  every  state  shall  be 


i8  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

bound  thereby,  anything  in  the  constitution  or  laws  of  any  state  to 
the  contrary  notwithstanding. 

The  senators  and  representatives  before  mentioned,  and  the  mem- 
bers of  the  several  state  legislatures,  and  all  executive  and  judicial 
officers,  both  of  the  United  States  and  of  the  several  states,  shall  be 
bound  by  oath  or  affirmation,  to  support  this  constitution;  but  no 
religious  test  shall  ever  be  required  as  a  qualification  to  any  office 
or  public  trust  under  the  United  States. 

ARTICLE  VII. 

The  ratification  of  the  conventions  of  nine  states  shall  be  suffi- 
cient for  the  establishment  of  this  constitution  between  the  states 
so  ratifying  the  same. 

Done  in  convention,  by  the  unanimous  consent  of  the  states  present, 
the  seventeenth  day  of  September,  in  the  year  of  our  Lord  one 
thousand  seven  hundred  and  eighty-seven,  and  of  the  independ- 
ence of  the  United  States  of  America  the  twelfth.  In  witness 
whereof,  we  have  hereunto  subscribed  our  names. 

[Signed  by]  Go.  WASHINGTON,  President, 

and  Deputy  from  Virginia, 
and  by  thirty-nine  delegates. 


ARTICLES  IN  ADDITION  TO,  AND  AMENDMENT  OF,  THE 

CONSTITUTION  OF  THE  UNITED  STATES 

OF  AMERICA. 

ARTICLE  I. 

Congress  shall  make  no  law  respecting  an  establishment  of  re- 
ligion, or  prohibiting  the  free  exercise  thereof;  or  abridging  the 
freedom  of  speech,  or  of  the  press ;  or  the  right  of  the  people  peace- 
ably to  assemble,  and  to  petition  the  government  for  a  redress  of 
grievances. 

ARTICLE  II. 

A  well  regulated  militia  being  necessary  to  the  security  of  a  free 
state,  the  right  of  the  people  to  keep  and  bear  arms  shall  not  be 
infringed. 

ARTICLE  III. 

No  soldier  shall,  in  time  of  peace,  be  quartered  in  any  house 
without  the  consent  of  the  owner ;  nor  in  time  of  war,  but  in  a 
manner  to  be  prescribed  by  law. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  19 

ARTICLE  IV. 

The  right  of  the  people  to  be  secure  in  their  persons,  houses, 
papers,  and  effects,  against  unreasonable  searches  and  seizures,  shall 
not  be  violated;  and  no  warrants  shall  issue,  but  upon  probable 
cause,  supported  by  oath  or  affirmation,  and  particularly  describing 
the  place  to  be  searched,  and  the  persons  or  things  to  be  seized. 

ARTICLE  V. 

No  person  shall  be  held  to  answer  for  a  capital,  or  other  infamous 
crime,  unless  on  a  presentment  or  indictment  of  a  grand  jury, 
except  in  cases  arising  in  the  land  or  naval  forces,  or  in  the  militia, 
when  in  actual  service,  in  time  of  war  or  public  danger;  nor  shall 
any  person  be  subject,  for  the  same  offense,  to  be  twice  put  in 
jeopardy  of  life  or  limb;  nor  shall  be  compelled,  in  any  criminal 
case,  to  be  a  witness  against  himself,  nor  be  deprived  of  life,  liberty, 
or  property,  without  due  process  of  law ;  nor  shall  private  property 
be  taken  for  public  use  without  just  compensation. 

ARTICLE  VI. 

In  all  criminal  prosecutions,  the  accused  shall  enjoy  the  right  to 
a  speedy  and  public  trial,  by  an  impartial  jury  of  the  state  and  dis- 
trict wherein  the  crime  shall  have  been  committed,  which  district 
shall  have  been  previously  ascertained  by  law,  and  to  be  informed 
of  the  nature  and  cause  of  the  accusation ;  to  be  confronted  with  the 
witnesses  against  him ;  to  have  compulsory  process  for  obtaining 
witnesses  in  his  favor,  and  to  have  the  assistance  of  counsel  for  his 
defence. 

ARTICLE  VII. 

In  suits  at  common  law,  where  the  value  in  controversy  shall 
exceed  twenty  dollars,  the  right  of  trial  by  jury  shall  be  preserved; 
and  no  fact,  tried  by  a  jury,  shall  be  otherwise  re-examined  in  any 
court  of  the  United  States,  than  according  to  the  rules  of  the  com- 
mon law. 

ARTICLE  VIII. 

Excessive  bail  shall  not  be  required,  nor  excessive  fines  imposed; 
nor  cruel  and  unusual  punishments  inflicted. 

ARTICLE  IX. 

The  enumeration  in  the  constitution,  of  certain  rights  shall  not 
be  construed  to  deny  or  disparage  others  retained  by  the  people. 

ARTICLE  X. 

The  powers  not  delegated  to  the  United  States  by  the  constitu- 
tion, nor  prohibited  by  it  to  the  states,  are  reserved  to  the  states 
respectively,  or  to  the  people. 


20  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

ARTICLE  XL 

The  judicial  power  of  the  United  States  shall  not  be  construed 
to  extend  to  any  suit  in  law  or  equity,  commenced  or  prosecuted 
against  one  of  the  United  States  by  citizens  of  another  state,  or  by 
citizens  or  .subjects  of  any  foreign  state. 

ARTICLE  XII. 

SECTION  1.  The  electors  shall  meet  in  their  respective  states  and 
vote  by  ballot  for  president  and  vice-president,  one  of  whom,  at 
least,  shall  not  be  an  inhabitant  of  the  same  state  with  themselves; 
they  shall  name  in  their  ballots  the  person  voted  for  as  president, 
and  in  distinct  ballots  the  person  voted  for  as  vice-president,  and 
they  shall  make  distinct  lists  of  all  persons  voted  for  as  president, 
and  of  all  persons  voted  for  as  vice-president,  and  of  the  number  of 
votes  for  each,  which  lists  they  shall  sign  and  certify,  and  transmit 
sealed  to  the  seat  of  the  government  of  the  United  States,  directed  to 
the  president  of  the  senate : — the  president  of  the  senate  shall,  in  the 
presence  of  the  senate  and  house  of  representatives,  open  all  the  cer- 
tificates, and  the  votes  shall  then  be  counted; — the  person  having 
the  greatest  number  of  votes  for  president,  shall  be  the  president, 
if  such  number  be  a  majority  of  the  whole  number  of  electors 
appointed ;  and  if  no  person  have  such  majority,  then  from  the  per- 
sons having  the  highest  numbers,  not  exceeding  three,  on  the  list  of 
those  voted  for  as  president,  the  house  of  representatives  shall 
choose  immediately,  by  ballot,  the  president.  But  in  choosing  the 
president,  the  votes  shall  be  taken  by  states,  the  representation 
from  each  state  having  one  vote;  a  quorum  for  this  purpose  shall 
consist  of  a  member  or  members  from  two-thirds  of  the  states,  and  a 
majority  of  all  the  states  shall  be  necessary  to  a  choice.  And  if  the 
house  of  representatives  shall  not  choose  a  president,  whenever 
the  right  of  choice  shall  devolve  upon  them,  before  the  fourth  day 
of  March  next  following,  then  the  vice-president  shall  act  as  presi- 
dent, as  in  the  case  of  the  death  or  other  constitutional  disability  of 
the  president.  The  person  having  the  greatest  number  of  votes  as 
vice-president,  shall  be  the  vice-president,  if  such  number  be  a 
majority  of  the  whole  number  of  electors  appointed;  and  if  no 
person  have  a  majority,  then  from  the  two  highest  numbers  on  the 
list,  the  senate  shall  choose  the  vice-president;  a  quorum  for  the 
purpose  shall  consist  of  two-thirds  of  the  whole  number  of  senators, 
and  a  majority  of  the  whole  number  shall  be  necessary  to  a  choice. 
But  no  person  constitutionally  ineligible  to  the  office  of  president, 
shall  be  eligible  to  that  of  vice-president  of  the  United  States. 

ARTICLE  XIII. 

SECTION  1.  Neither  slavery  nor  involuntary  servitude,  except  as 
a  punishment  for  crime,  whereof  the  party  shall  have  been  duly 
convicted,  shall  exist  within  the  United  States,  or  any  place  subject 
to  their  jurisdiction. 

SEC.  2.  Congress  shall  have  power  to  enforce  this  article  by 
appropriate  legislation. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  21 

ARTICLE  XIV. 

SECTION  1.  All  persons  born  or  naturalized  in  the  United  States, 
and  subject  to  the  jurisdiction  thereof,  are  citizens  of  the  United 
States,  and  of  the  state  wherein  they  reside.  No  state  shall  make 
or  enforce  any  law  which  shall  abridge  the  privileges  or  immuni- 
ties of  citizens  of  the  United  States ;  nor  shall  any  state  deprive  any 
person  of  life,  liberty,  or  property,  without  due  process  of  law ;  nor 
deny  to  any  person  within  its  jurisdiction  the  equal  protection  of 
the  laws. 

SEC.  2.  Representatives  shall  be  apportioned  among  the  several 
states  according  to  their  respective  numbers,  counting  the  whole 
number  of  persons  in  each  state,  excluding  Indians  not  taxed.  But 
when  the  right  to  vote  at  any  election  for  the  choice  of  electors  for 
president  and  vice-president  of  the  United  States,  representatives 
in  congress,  the  executive  and  judicial  officers  of  a  state,  or  the 
members  of  the  legislature  thereof,  is  denied  to  any  of  the  male 
inhabitants  of  such  state,  being  twenty-one  years  of  age,  and  citi- 
zens of  the  United  States,  or  in  any  way  abridged,  except  for  par- 
ticipation in  rebellion  or  other  crime,  the  basis  of  representation 
therein  shall  be  reduced  in  the  proportion  which  the  number  of 
such  male  citizens  shall  bear  to  the  whole  number  of  male  citizens 
twenty-one  years  of  age  in  such  state. 

SEC.  3.  No  person  shall  be  a  senator  or  representative  in  con- 
gress, or  elector  of  president  and  vice-president,  or  hold  any  office, 
civil  or  military,  under  the  United  States,  or  under  any  state,  who 
having  previously  taken  an  oath,  as  a  member  of  congress,  or  as  an 
officer  of  the  United  States,  or  as  a  member  of  any  state  legislature, 
or  as  executive  or  judicial  officer  of  any  state,  to  support  the  con- 
stitution of  the  United  States,  shall  have  engaged  in  insurrection 
or  rebellion  against  the  same,  or  given  aid  or  comfort  to  the  enemies 
thereof.  But  congress  may,  by  a  vote  of  two-thirds  of  each  house, 
remove  such  disability. 

SEC.  4.  The  validity  of  the  public  debt  of  the  United  States, 
authorized  by  law,  including  debts  incurred  for  payment  of  pensions 
and  bounties  for  services  in  suppressing  insurrection  or  rebellion, 
shall  not  be  questioned.  But  neither  the  United  States  nor  any 
state  shall  assume  or  pay  any  debt  or  obligation  incurred  in  aid  of 
insurrection  or  rebellion  against  the  United  States,  or  any  claim  for 
the  loss  or  emancipation  of  any  slave ;  but  all  such  debts,  obligations, 
and  claims  shall  be  held  illegal  and  void. 

SEC.  5.  The  congress  shall  have  power  to  enforce,  by  appropriate 
legislation,  the  provisions  of  this  article. 

ARTICLE  XV. 

SECTION  1.  The  right  of  citizens  of  the  United  States  to  vote 
shall  not  be  denied  or  abridged  by  the  United  States  or  by  any  state 
on  account  of  race,  color,  or  previous  condition  of  servitude. 

SEC.  2.  The  congress  shall  have  power  to  enforce  this  article  by 
appropriate  legislation. 


22  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

ARTICLE  XVI. 

The  Congress  shall  have  power  to  lay  and  collect  taxes  on  in- 
comes, from  whatever  source  derived,  without  apportionment 
among  the  several  States,  and  without  regard  to  any  census  or 
enumeration. 

ARTICLE  XVII. 

The  Senate  of  the  United  States  shall  be  composed  of  two 
Senators  from  each  State,  elected  by  the  people  thereof,  for  six 
years ;  and  each  Senator  shall  have  one  vote.  The  electors  in  each 
State  shall  have  the  qualifications  requisite  for  electors  of  the  most 
numerous  branch  of  the  State  Legislatures. 

When  vacancies  happen  in  the  representation  of  any  State  in  the 
Senate,  the  executive  authority  of  such  State  shall  issue  writs  of 
election  to  fill  such  vacancies :  Provided,  That  the  legislature  of  any 
State  may  empower  the  executive  thereof  to  make  temporary  ap- 
pointments until  the  people  fill  the  vacancies  by  election  as  the  legis- 
lature may  direct. 

This  amendment  shall  not  be  so  construed  as  to  affect  the  election 
or  term  of  any  Senator  chosen  before  it  becomes  valid  as  part  of 
the  Constitution. 

Note. — The  Constitution  was  ratified  by  the  thirteen  original  States  in 
the  following  order:  Delaware,  December  7,  1787,  unanimously;  Pennsyl- 
vania, December  12,  1787,  vote  46  to  23;  New  Jersey,  December  18,  1787, 
unanimously;  Georgia,  January  2,  1788,  unanimously;  Connecticut,  January  9, 
1788,  vote  128  to  40 ;  Massachusetts,  February  6,  1788,  vote  187  to  168 ;  Mary- 
land, April  28,  1788,  vote  63  to  12 ;  South  Carolina,  May  23,  1788,  vote  149  to 
73;  New  Hampshire,  June  21,  1788,  vote  57  to  46;  Virginia,  June  25,  1788, 
vote  89  to  79;  New  York,  July  26,  1788,  vote  30  to  28;  North  Carolina, 
November  21,  1789,  vote  193  to  75 ;  Rhode  Island,  May  29,  1790,  vote  34  to  32. 

Amendments  I  to  X  inclusive  were  declared  in  force  December  15,  1791. 
XI  was  declared  in  force  January  8,  1798.  XII,  regulating  elections,  was  rati- 
fied by  all  the  States  except  Connecticut,  Delaware,  Massachusetts,  and  New 
Hampshire,  which  rejected  it.  It  was  declared  in  force  September  28,  1804. 
XIII.  The  emancipation  amendment  was  ratified  by  31  of  the  36  States; 
rejected  by  Delaware  and  Kentucky;  not  acted  on  by  Texas;  conditionally 
ratified  by  Alabama  and  Mississippi.  Proclaimed  December  18,  1865.  XIV. 
Reconstruction  amendment  was  ratified  by  23  Northern  States;  rejected  by 
Delaware,  Kentucky,  Maryland  and  10  Southern  States,  and  not  acted  on 
by  California.  The  10  Southern  States  subsequently  ratified  under  pressure. 
Proclaimed  July  28,  1868.  XV.  Negro  citizenship  amendment  was  not  acted 
on  by  Tennessee,  rejected  by  California,  Delaware,  Kentucky,  Maryland, 
New  Jersey,  and  Oregon;  ratified  by  the  remaining  30  States.  New  York 
rescinded  its  ratification  January  5,  1870.  Proclaimed  March  30,  1870. 
XVI  was  proclaimed  in  force  February  25,  1913.  XVII  was  proclaimed  in 
force  May  31,  1913. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  23 


CHAPTER  I. 

The  Executive  Department 

Section  1. 
THE  PRESIDENT'S  POWER  OF  APPOINTMENT. 

MARBURY  v.   MADISON. 
1  CRANCH,  137.     1803. 

This  was  an  original  proceeding  brought  in  the  Supreme  Court 
of  the  United  States  for  a  mandamus  commanding  James  Madison, 
Secretary  of  State  under  President  Jefferson,  to  deliver  a  commis- 
sion to  William  Marbury,  the  plaintiff,  as  a  justice  of  the  peace  for 
the  District  of  Columbia.  The  plaintiff  claimed  to  have  been  ap- 
pointed by  President  Jefferson's  predecessor,  President  John  Adams, 
The  particular  act  of  Congress  upon  which  the  plaintiff  relied  in 
bringing  this  action  was  the  Judiciary  Act  of  1789,  which  authorized 
the  Supreme  Court  of  the  United  States  to  issue  writs  of  mandamus 
to  persons  holding  office  under  the  authority  of  the  United  States. 

MR.  CHIEF  JUSTICE  MARSHALL  delivered  the  opinion  of  the  court. 

"In  the  order  in  which  the  court  has  viewed  this  subject,  the 
following  questions  have  been  considered  and  decided.  1st.  Has 
the  applicant  a  right  to  the  commission  he  demands?  2nd.  If  he 
has  a  right,  and  that  right  has  been  violated,  do  the  laws  of  his 
country  afford  him  a  remedy?  3rd.  If  they  do  afford  him  a  rem- 
edy, is  it  a  mandamus  issuing  from  this  court  ?" 

The  first  object  of  inquiry  is, 

1st,  Has  the  applicant  a  right  to  the  commission  he  demands? 

His  right  originates  in  an  Act  of  Congress  passed  in  February, 
1801,  concerning  the  District  of  Columbia. 

After  dividing  the  district  into  two  counties,  the  llth  section 
of  this  law,  enacts,  "that  there  shall  be  appointed  in  and  for  each 
of  the  said  counties,  such  number  of  discreet  persons  to  be  justices 
of  the  peace  as  the  President  of  the  United  States  shall,  from  time 
to  time,  think  expedient,  to  continue  in  office  for  five  years." 

It  appears  from  the  affidavits,  that  in  compliance  with  this  law, 
a  commission  for  William  Marbury,  as  a  justice  of  the  peaceffor 
the  county  of  Washington,  was  signed  by  John  Adams,  then  Pres- 
ident of  the  United  States;  after  which  the  seal  of  the  United 
States  was  affixed  to  it;  but  the  commission  has  never  reached 
the  person  for  whom  it  was  made  out. 


24  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

In  order  to  determine  whether  he  is  entitled  to  this  commission, 
it  becomes  necessary  to  enquire  whether  he  has  been  appointed  to 
the  office.  For  if  he  has  been  appointed,  the  law  continues  him  in 
office  for  five  years,  and  he  is  entitled  to  the  possession  of  those 
evidences  of  office,  which  being  completed,  became  his  property. 

The  second  section  of  the  second  article  of  the  Constitution  de- 
clares, that,  "the  president  shall  nominate,  and  by  and  with  the 
advice  and  consent  of  the  Senate,  shall  appoint  ambassadors,  other 
public  ministers  and  consuls,  and  all  other  officers  of  the  United 
States,  whose  appointments  are  not  otherwise  provided  for."  The 
third  section  declares,  that  "he  shall  commission  all  the  officers 
of  the  United  States." 

An  Act  of  Congress  directs  the  Secretary  of  State  to  keep  the 
seal  of  the  United  States,  "to  make  out  and  record,  and  affix  the 
said  seal  to  all  civil  commissions  to  officers  of  the  United  States, 
to  be  appointed  by  the  President  by  and  with  the  consent  of  the 
Senate,  or  by  the  President  alone;  provided  that  the  said  seal 
shall  not  be  affixed  to  any  commission  before  the  same  shall  have 
been  signed  by  the  President  of  the  United  States." 

These  are  the  clauses  of  the  constitution  and  laws  of  the  United 
States,  which  affect  this  part  of  the  case.  They  seem  to  contem- 
plate three  distinct  operations ;  1st,  the  nomination.  This  is  the 
sole  act  of  the  President,  and  is  completely  voluntary.  2nd,  the 
appointment.  This  is  also  the  act  of  the  President,  and  is  also  a 
voluntary  act,  though  it  can  only  be  performed  by  and  with  the 
advice  and  consent  of  the  Senate.  3rd,  the  commission.  To  grant 
a  commission  to  a  person  appointed,  might  perhaps  be  deemed  a 
duty  enjoined  by  the  Constitution.  "He  shall,"  says  that  instru- 
ment, "commission  all  officers  of  the  United  States." 

This  is  an  appointment  made  by  the  President,  by  and  with  the 
advice  and  consent  of  the  Senate,  and  is  evidenced  by  no  act  but 
the  commission  itself.  In  such  a  case,  therefore,  the  commission 
and  the  appointment  seem  inseparable;  it  being  almost  impossible 
to  show  an  appointment  otherwise  than  by  proving  the  existence 
of  a  commission;  still  the  commission  is  not  necessarily  the  ap- 
pointment, though  conclusive  evidence  of  it. 

The  last  act  to  be  done  by  the  President,  is  the  signature  of  the 
commission.  He  has  then  acted  on  the  advice  and  consent  of  the 
Senate  to  his  own  nomination.  The  time  for  deliberation  has 
passed.  He  has  decided.  His  judgment,  on  the  advice  and  consent 
of  the  Senate  concurring  with  his  nomination,  has  been  made,  and 
the  officer  is  appointed.  This  appointment  is  evidenced  by  an  open, 
unequivocal  act;  and  being  the  last  act  required  from  the  person 
making  it,  necessarily  excludes  the  idea  of  its  being,  so  far  as 
respects  the  appointment,  an  inchoate  and  incomplete  transaction. 

Some  point  of  time  must  be  taken  when  the  power  of  the  ex- 
ecutive over  an  officer,  not  removable  at  his  will,  must  cease.  That 
point  of  time  must  be  when  the  constitutional  power  of  appoint- 
ment has  been  exercised.  And  this  power  has  been  exercised  when 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  25 

the  last  act,  required  from  the  person  possessing  the  power,  has 
been  performed.  This  last  act  is  the  signature  of  the  commission. 

The  signature  is  a  warrant  for  affixing  the  great  seal  to  the  com- 
mission ;  and  the  great  seal  is  only  to  be  affixed  to  an  instrument 
which  is  complete.  It  attests,  by  an  act  supposed  to  be  of  public 
notoriety,  the  verity  of  the  Presidential  signature. 

The  commission  being  signed,  the  subsequent  duty  of  the  Sec- 
retary of  State  is  prescribed  by  law,  and  is  not  to  be  guided  by 
the  will  of  the  President.  He  is  to  affix  the  seal  of  the  United  States 
to  the  commission  and  is  to  record  it. 

This  is  not  a  proceeding  which  may  be  varied,  if  the  judgment 
of  the  executive  shall  suggest  one  more  eligible;  but  is  a  precise 
course  accurately  marked  out  by  law,  and  is  to  be  strictly  pursued. 
It  is  the  duty  of  the  Secretary  of  State  to  conform  to  the  law,  and 
in  this  he  is  an  officer  of  the  United  States,  bound  to  obey  the 
laws.  He  acts  in  this  respect,  under  the  authority  of  the  law  and 
not  by  the  instructions  of  the  President.  It  is  a  ministerial  act 
which  the  law  enjoins  on  a  particular  officer  for  a  particular  pur- 
pose. 

It  is  not  necessary  that  livery  should  be  made  personally  to  the 
grantee  of  the  office.  It  never  is  so  made.  The  law  would  seem 
to  contemplate  that  it  should  be  made  to  the  Secretary  of  State, 
since  it  directs  the  Secretary  to  affix  the  seal  to  the  commission 
after  it  shall  have  been  signed  by  the  President.  If  then  the  act 
of  livery  be  necessary  to  give  validity  to  the  commission,  it  has 
been  delivered  when  executed  and  given  to  the  Secretary  for  the 
purpose  of  being  sealed,  recorded  and  transmitted  to  the  party. 

To  withhold  his  (Marbury's)  commission,  therefore,  is  an  act 
deemed  by  the  court  not  warranted  by  law,  but  violative  of  a 
vested  legal  right. 

This  brings  us  to  the  second  enquiry,  which  is, 

2.  If  he  has  a  right  and  that  right  has  been  violated,  do  the 
laws  of  his  country  afford  him  a  remedy  ? 

Where  a  specific  duty  is  assigned  by  law,  and  individual  rights 
depend  upon  the  performance  of  that  duty,  it  seems  clear  that  the 
individual  who  considers  himself  injured,  has  a  right  to  resort  to 
the  laws  of  his  country  for  a  remedy. 

It  remains  to  be  inquired  whether,  thirdly-  He  is  entitled  to  the 
remedy  for  which  he  applies.  This  deperms  on,  first,  the  nature 
of  the  writ  applied  for,  and,  secondly,  the  power  of  this  court. 

Blackstone,  in  the  third  volume  of  his  commentaries,  page  110, 
defines  a  mandamus  to  be,  "a  command  issuing  in  the  king's  name 
from  a  court  of  king's  bench,  and  directed  to  any  person,  corpora- 
tion, or  inferior  court  of  judicature  within  the  king's  dominions, 
requiring  them  to  do  some  particular  thing  therein  specified,  which 
appertains  to  their  office  and  duty,  and  which  the  court  of  king's 
bench  has  previously  determined,  or  at  least  supposes,  to  be  con- 
sonant to  right  and  justice.  *  *  *  *  This,  then,  is  a  plain 


26  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

case  for  a  mandamus,  either  to  deliver  the  commission,  or  a  copy 
of  it  from  the  record ;  and  it  only  remains  to  be  enquired,  whether 
it  can  issue  from  this  court. 

"The  act  to  establish  the  judicial  courts  of  the  United  States 
authorizes  the  Supreme  Court  'to  issue  writs  of  mandamus,  in 
cases  warranted  by  the  principles  and  usages  of  law,  to  any  courts 
appointed,  or  persons  holding  office,  under  the  authority  of  the 
United  States.' 

"The  Secretary  of  State,  being  a  person  holding  an  office  under 
the  authority  of  the  United  States,  is  precisely  within  the  letter 
of  the  description;  and  if  this  court  is  not  authorized  to  issue  a 
writ  of  mandamus  to  such  an  officer,  it  must  be  because  the  law 
is  unconstitutional,  and  therefore  absolutely  incapable  of  conferring 
the  authority,  and  assigning  the  duties  which  its  words  purport 

to  confer  and  assign.     *     *     *     *" 

********** 

The  question  whether  an  act  repugnant  to  the  Constitution  can 
become  the  law  of  the  land,  is  a  question  deeply  interesting  to  the 
United  States;  but,  happily,  not  of  an  intricacy  proportioned  to  its 
interest.  It  ^eems  only  necessary  to  recognize  certain  principles, 
supposed  to  have  been  long  and  well  established,  to  decide  it. 

That  the  people  have  an  original  right  to  establish,  for  their  future 
government,  such  principles  as,  in  their  opinion,  shall  most  conduce 
to  their  own  happiness,  is  the  basis  on  which  the  whole  American 
fabric  has  been  erected.  The  exercise  of  this  original  right  is  a 
very  great  exertion;  nor  can  it  nor  ought  it  to  be  frequently  re- 
peated. The  principles,  therefore,  so  established,  are  deemed  fun- 
damental. And  as  the  authority  from  which  they  proceed  is  su- 
preme, and  can  seldom  act,  they  are  designed  to  be  permanent. 

This  original  and  supreme  will  organizes  the  government,  and 
assigns  to  different  departments  their  respective  powers.  It  may 
either  stop  here,  or  establish  certain  limits  not  to  be  transcended 
by  those  departments. 

The  government  of  the  United  States  is  of  the  latter  description. 
The  powers  of  the  legislature  are  defined  and  limited ;  and  that  those 
limits  may  not  be  mistaken,  or  forgotten,  the  Constitution  is  written. 
To  what  purpose  are  powers  limited,  and  to  what  purpose  is  that 
limitation  committed  to  writing,  if  these  limits  may,  at  any  time,  be 
passed  by  those  intended  to  be  restrained  ?  The  distinction  between 
a  government  with  limited  and  unlimited  powers  is  abolished,  if 
those  limits  do  not  confine  the  persons  on  whom  they  are  imposed, 
and  if  those  limits  do  not  confine  the  persons  on  whom  they  are  im- 
posed, and  if  acts  prohibited  and  acts  allowed  are  of  equal  obligation. 
It  is  a  proposition  too  plain  to  be  contested,  that  the  Constitution 
controls  any  legislative  act  repugnant  to  it ;  or  that  the  legislature 
may  alter  the  Constitution  by  an  ordinary  act. 

Between  these  alternatives  there  is  no  middle  ground.  The  Con- 
stitution is  either  a  superior  paramount  law,  unchangeable  by  ordi- 
nary means,  or  it  is  on  a  level  with  ordinary  legislative  acts,  and,  like 
other  acts,  is  alterable  when  the  legislature  shall  please  to  alter  it. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  27 

If  the  former  part  of  the  alternative  be  true,  then  a  legislative  act 
contrary  to  the  Constitution  is  not  law;  if  the  latter  part  be  true, 
then  written  constitutions  are  absurd  attempts,  on  the  part  of  the 
people,  to  limit  a  power  in  its  own  nature  illimitable. 

Certainly  all  those  who  have  framed  written  constitutions  contem- 
plate them  as  forming  the  fundamental  and  paramount  law  of  the 
nation,  and,  consequently,  the  theory  of  every  such  government  must 
be,  that  an  act  of  the  legislature,  repugnant  to  the  Constitution,  is 
void. 

This  theory  is  essentially  attached  to  a  written  constitution,  and 
is  consequently  to  be  considered,  by  this  court,  as  one  of  the  funda- 
mental principles  of  our  society.  It  is  not,  therefore,  to  be  lost  sight 
of  in  the  further  consideration  of  this  subject. 

If  an  act  of  the  legislature,  repugnant  to  the  Constitution,  is  void, 
does  it,  notwithstanding  its  invalidity,  bind  the  courts,  and  oblige 
them  to  give  it  effect?  Or,  in  other  words,  though  it  be  not  law, 
does  it  constitute  a  rule  as  operative  as  if  it  was  a  law  ?  This  would 
be  to  overthrow  in  fact  what  was  established  in  theory;  and  would 
seem,  at  first  view,  an  absurdity  too  gross  to  be  insisted  on.  It  shall, 
however,  receive  a  more  attentive  consideration. 

It  is  emphatically  the  province  and  duty  of  the  judical  department 
to  say  what  the  law  is.  Those  who  apply  the  rule  to  particular  cases 
must  of  necessity  expound  and  interpret  that  rule.  If  two  laws  con- 
flict with  each  other,  the  courts  must  decide  on  the  operation  of  each. 

So  if  a  law  be  in  opposition  to  the  Constitution;  if  both  the  law 
and  the  Constitution  apply  to  a  particular  case,  so  that  the  court  must 
either  decide  that  case  conformably  to  the  law,  disregarding  the  Con- 
stitution, or  conformably  to  the  Constitution,  disregarding  the  law, 
the  court  must  determine  which  of  thes  conflicting  rules  governs 
the  case.  This  is  of  the  very  essence  of  judicial  duty. 

If,  then,  the  courts  are  to  regard  the  Constitution,  and  the  Consti- 
tution is  superior  to  any  ordinary  act  of  the  legislature,  the  Con- 
stitution, and  not  such  ordinary  act,  must  govern  the  case  to  which 
they  both  apply. 

Those,  then,  who  controvert  the  principle  that  the  Constitution  is 
to  be  considered,  in  court,  as  a  paramount  law,  are  reduced  to  the 
necessity  of  maintaining  that  courts  must  close  their  eyes  on  the 
Constitution,  and  see  only  the  law. 

This  doctrine  would  subvert  the  very  foundation  of  all  written 
constitutions.  It  would  declare  that  an  act  which,  according  to  the 
principles  and  theory  of  our  government,  is  entirely  void,  it  yet,  in 
practice,  completely  obligatory.  It  would  declare  that  if  the  legis- 
lature shall  do  what  is  expressly  forbidden,  such  act,  notwithstanding 
the  express  prohibition,  is  in  reality  effectual.  It  would  be  giving 
to  the  legislature  a  practical  and  real  omnipotence,  with  the  same 
breath  which  professes  to  restrict  their  powers  with  narrow  limits. 
It  is  prescribing  limits,  and  declaring  that  those  limits  may  be  passed 
at  pleasure.  *  *  *  * 

Thus,  the  particular  phraseology  of  the  Constitution  of  the  United 


28  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

States  confirms  and  strengthens  the  principle,  supposed  to  be  essen- 
tial to  all  written  constitutions,  that  a  law  repugnant  to  the  Consti- 
tution is  void;  and  that  courts,  as  well  as  other  departments,  are 
bound  by  that  instrument. 

The  rule  {for  a  mandamus)  must  be  discharged. 


Section  2. 

THE   PRESIDENT'S   DIPLOMATIC   AND   TREATY-MAKING 

POWERS. 

JONES  v.  UNITED  STATES. 
137  U.  S.,  202.     1890. 

This  was  an  indictment,  found  in  the  District  Court  of  the  United 
States  for  the  District  of  Maryland,  alleging  that  Henry  Jones,  late 
of  that  District,  on  September  14,  1889,  at  Navassa  Island,  a  place 
which  then  and  there  was  under  the  sole  and  exclusive  jurisdiction 
of  the  United  States  and  out  of  the  jurisdiction  of  any  particular 
state  or  district  of  the  United  States,  murdered  one  Thomas  N. 
Foster.  Navassa  Island  was  situated  in  the  Caribbean  Sea  and 
contained  a  deposit  of  guano.  An  Act  of  Congress  relating  to 
the  discovery  and  occupation  by  citizens  of  the  United  States  of 
guano  islands  not  within  the  lawful  jurisdiction  of  any  other  gov- 
ernment, provided  that  the  President  should  have  the  power  to 
extend  the  jurisdiction  of  the  United  States  over  the  islands  so 
occupied.  Evidence  was  introduced  to  show  that  the  executive 
branch  of  the  federal  government  had  extended  the  jurisdiction  of 
the  United  States  to  Navassa  Island.  The  District  of  Maryland 
was  the  District  of  the  United  States  into  which  Jones  was  first 
brought  from  Navassa  Island.  In  the  District  Court,  the  Govern- 
ment sought  to  establish  the  right  of  the  federal  court  to  try  Jones 
for  the  murder  committed  on  the  above  mentioned  island  under  the 
Revised  Statutes  of  the  United  States,  Section  1039,  providing  for 
the  punishment  of  murder  committed  "within  any  fort,  arsenal, 
dock-yard,  magazine,  or  any  other  place  or  district  or  country  under 
the  exclusive  jurisdiction  of  the  United  States."  Jones  questioned 
the  validity  of  the  Act  of  Congress  concerning  guano  islands, 
especially  the  power  of  the  President,  under  the  Act.  Jones  was 
convicted  in  the  District  Court  and  sentenced  to  death.  An  appeal 
was  taken  to  the  Supreme  Court  of  the  United  States. 

MR.  JUSTICE  GRAY  delivered  the  opinion  of  the  court. 

By  the  law  of  nations,  recognized  by  all  civilized  States,  dominion 
of  new  territory  may  be  acquired  by  discovery  and  occupation,  as 
well  as  by  cession  or  conquest;  and  when  citizens,  or  subjects  of  one 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  29 

nation,  in  its  name,  and  by  its  authority  or  with  its  assent,  take  and 
hold  actual  continuous,  and  useful  possession  (although  only  for  the 
purpose  of  carrying  on  a  particular  business,  such  as  catching  and 
curing  fish,  or  working  mines)  of  territory  unoccupied  by  any  other 
government  or  its  citizens,  the  nation  to  which  they  belong  may 
exercise  such  jurisdiction  and  for  such  period  as  it  sees  fit  over 
territory  so  acquired.  This  principle  affords  ample  warrant  for  the 
legislation  of  Congress  concerning  guano  islands.  *  *  *  * 

Who  is  the  sovereign,  de  jure  or  de  facto,  of  a  territory  is  not  a 
judicial,  but  a  political  question,  the  determination  of  which  by  the 
legislative  and  executive  departments  of  any  government  conclu- 
sively binds  the  judges,  as  well  as  all  other  officers,  citizens,  and 
subjects  of  that  government.  This  principle  has  always  been  up- 
held by  this  court,  and  has  been  affirmed  under  a  great  variety  of 
circumstances.  *  *  *  * 

(In  Williams  v.  Suffolk  Ins.  Co.)  this  court  held  that  the  action 
of  the  executive  department,  on  the  question  to  whom  the  sovereign- 
ty of  those  islands  belonged,  was  binding  and  conclusive  upon  the 
courts  of  the  United  States,  saying:  "Can  there  be  any  doubt 
that  when  the  executive  branch  of  the  government,  which  is  charged 
with  our  foreign  relations,  shall  in  its  correspondence  with  a  foreign 
nation  assume  a  fact  in  regard  to  the  sovereignty  of  any  island 
or  country,  it  is  conclusive  on  the  judicial  department?  And  in 
this  view  it  is  not  material  to  inquire,  nor  is  it  the  province  of  the 
court  to  determine,  whether  the  executive  be  right  or  wrong.  It 
is  enough  to  know,  that  in  the  exercise  of  his  constitutional  func- 
tions he  has  decided  the  •  question.  Having  done  this  under  the 
responsibilities  which  belong  to  him,  it  is  obligatory  on  the  people 
and  government  of  the  Union.  In  the  present  case,  as  the  ex- 
ecutive in  his  message,  and  in  his  correspondence  with  the  govern- 
ment of  Buenos  Ayres,  has  denied  the  jurisdiction  which  it  has 
assumed  to  exercise  over  the  Falkland  Islands,  the  fact  must  be 
taken  and  acted  on  by  this  court  as  thus  asserted  and  maintained." 
13  Pet.  420. 

All  courts  of  justice  are  bound  to  take  judicial  notice  of  the  terri- 
torial extent  of  the  jurisdiction  exercised  by  the  government  whose 
laws  they  administer,  or  of  its  recognition  or  denial  of  the  sover- 
eignty of  a  foreign  power,  as  appearing  from  the  public  acts  of  the 
legislature  and  executive,  although  those  acts  are  not  formally  put 
in  evidence,  nor  in  accord  with  the  pleadings.  *  *  *  * 

In  the  case  at  bar,  the  indictment  alleges  that  the  Island  of 
Navassa,  on  which  the  murder  is  charged  to  have  been  committed, 
was  at  the  time  under  the  sole  and  exclusive  jurisdiction  of  the 
United  States,  and  out  of  the  jurisdiction  of  any  particular  State  or 
district  of  the  United  States,  and  recognized  and  considered  by  the 
United  States  as  containing  a  deposit  of  guano  within  the  meaning 
and  terms  of  the  laws  of  the  United  States  relating  to  such  islands, 
and  recognized  and  considered  by  the  United  States  as  appertaining 
to  the  United  States  and  in  the  possession  of  the  United  States 
under  those  laws. 


30  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

These  allegations,  indeed,  if  inconsistent  with  facts  of  which  the 
court  is  bound  to  take  judicial  notice,  could  not  be  treated  as  conclu- 
sively supporting  the  verdict  and  judgment.  But,  on  full  considera- 
tion of  the  matter,  we  are  of  opinion  that  those  facts  are  quite  in 
accord  with  the  allegations  of  the  indictment. 

The  power  conferred  on  the  President  of  the  United  States  by 
Section  1  of  the  Act  of  Congress  of  1856,  to  determine  that  a  guano 
island  shall  be  considered  as  appertaining  to  the  United  States,  being 
a  strictly  executive  power,  affecting  foreign  relations,  and  the  man- 
ner in  Which  his  determination  shall  be  made  known  not  having 
been  prescribed  by  statute,  there  can  be  no  doubt  that  it  may  be 
declared  through  the  Department  of  State,  whose  acts  in  this 
regard  are  in  legal  contemplation  the  acts  of  the  President. 

Conviction  in  the  lower  court  is  affirmed. 


Section  3. 
T^  .  PRESIDENT'S  EXECUTIVE  POWER. 

IN  RE  NEAGLE. 
135  U.  S.,  I.     1890. 

David  Neagle,  a  deputy  marshal  of  the  United  States  for  the 
District  of  California,  was  brought  by  writ  of  habeas  corpus 
before  the  United  States  Circuit  Court  upon  a  petition  that  he  was 
being  unlawfully  imprisoned  by  the  State  of  California  upon  the 
charge  of  having  murdered  one  David  S.  Terry.  Neagle  claimed 
that  the  killing  of  Terry  was  done  by  him  in  pursuance  of  his  duty 
as  a  deputy  marshal  in  defending  the  life  of  Mr.  Justice  Field,  a 
justice  of  the  United  States  Supreme  Court,  while  the  latter  was 
discharging  his  duties  as  circuit  judge  of  the  Ninth  Circuit.  The 
facts  showed  that  there  was  a  settled  purpose  on  the  part  of  Terry 
and  his  wife  to  murder  Mr.  Field  on  his  official  visit  to  California 
in  1889,  because  of  some  animosity  due  to  a  judicial  decision  ren- 
dered by  him.  Neagle  had  been  appointed  by  the  Attorney-Gen- 
eral of  the  United  States,  acting  for  the  President,  and  the  United 
States,  to  guard  Mr.  Field  against  attack.  Terry  met  Mr.  Field 
upon  a  railroad  train  and  made  a  murderous  attack  upon  him, 
which  Neagle  had  reason  to  believe  would  result  in  his  death  unless 
he  interfered,  whereupon  he  shot  and  killed  Terry.  Neagle  was 
arrested  and  imprisoned  in  the  county  jail  at  San  Joaquin  county, 
California,  charged  with  murder. 

The  United  States  Circuit  Court  decided  "that  the  prisoner  was 
in  custody  for  an  act  done  in  pursuance  of  a  law  of  the  United 
States,  and  in  custody  in  violation  of  the  Constitution  and  laws  of 
the  United  States,"  and  it  was  therefore  ordered  that  he  be  dis- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  31 

charged  from  custody.  An  appeal  was  then  taken  to  the  Supreme 
Court  of  the  United  States  by  the  sheriff  of  San  Joaquin  county, 
California,  from  whose  custody  Neagle  was  discharged  by  the  order 
of  the  Circuit  Court. 

MR.  JUSTICE  MILLER  ruled  as  follows : 

We  cannot  doubt  the  power  of  the  President  to  take  measures 
for  the  protection  of  a  judge  of  one  of  the  courts  of  the  United 
States,  who,  while  in  the  discharge  of  the  duties  of  his  office,  is 
threatened  with  a  personal  attack  which  may  probably  result  in  his 
death,  and  we  think  it  clear  that  where  this  protection  is  to  be 
afforded  through  the  civil  power,  the  Department  of  Justice  is  the 
proper  one  to  set  in  motion  the  necessary  means  of  protection.  The 
correspondence  already  recited  in  this  opinion  between  the  marshal 
of  the  Northern  District  of  California,  and  the  Attorney-General, 
and  the  District  Attorney  of  the  United  States  for  that  district, 
although  prescribing  no  very  specific  mode  of  affording  this  protec- 
tion by  the  Attorney-General,  is  sufficient,  we  think,  to  warrant  the 
marshal  in  taking  the  steps  which  he  did  take,  in  making  the  pro- 
visions which  he  did  make,  for  the  protection  and  de  T^C  of  Mr. 
Justice  Field.  *  *  *  * 

That  there  is  a  peace  of  the  United  States ;  that  a  man  assaulting 
a  judge  of  the  United  States  while  in  the  discharge  of  his  duties 
violates  that  peace;  that  in  such  case  the  marshal  of  the  United 
States  stands  in  the  same  relation  to  the  peace  of  the  United  States 
which  the  sheriff  of  the  county  does  to  the  peace  of  the  State  of 
California,  are  questions  too  clear  to  need  argument  to  prove  them. 
That  it  would  be  the  duty  of  a  sheriff,  if  one  had  been  present  at 
this  assault  by  Terry  upon  Judge  Field,  to  prevent  this  breach  of 
the  peace,  to  prevent  this  assault,  to  prevent  the  murder  which  was 
contemplated  by  it,  cannot  be  doubted.  And  if,  in  performing  this 
duty,  it  became  necessary  for  the  protection  of  Judge  Field,  or  of 
himself,  to  kill  Terry,  in  a  case  where,  like  this,  it  was  evidently  a 
question  of  the  choice  of  who  should  be  killed,  the  assailant  and 
violator  of  the  law  and  disturber  of  the  peace,  or  the  unoffending 
man  who  was  in  his  power,  there  can  be  no  question  of  the  authority 
of  the  sheriff  to  have  killed  Terry.  So  the  marshal  of  the  United 
States,  charged  with  the  duty  of  protecting  and  guarding  the  judge 
of  the  United  States  Court  against  this  special  assault  upon  his 
person  and  his  life,  being  present  at  the  critical  moment,  when 
prompt  action  was  necessary,  found  it  to  be  his  duty,  a  duty  which 
he  had  no  liberty  to  refuse  to  perform,  to  take  the  steps  which 
resulted  in  Terry's  death.  This  duty  was  imposed  upon  him  by  the 
section  of  the  Revised  Statutes  which  we  have  recited  in  connection 
with  the  powers  conferred  by  the  State  of  California  upon  its  peace 
officers,  which  become,  by  this  statute,  in  proper  cases,  transferred 
as  duties  to  the  marshals  of  the  United  States. 

But  all  these  questions  being  conceded,  it  is  urged  against  the 


32  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

relief  sought  by  this  writ  of  habeas  corpus,  that  the  question  of 
the  guilt  of  the  prisoner  of  the  crime  of  murder  is  a  question  to  be 
determined  by  the  laws  of  California,  and  to  be  decided  by  its 
courts,  and  that  there  exists  no  power  in  the  government  of  the 
United  States  to  take  away  the  prisoner  from  the  custody  of  the 
proper  authorities  of  the  State  of  California  and  carry  him  before 
a  judge  of  the  court  of  the  United  States,  and  release  him  without 
a  trial  by  jury  according  to  the  laws  of  the  State  of  California. 
That  the  statute  of  the  United  States  authorizes  and  directs  such 
a  proceeding  and  such  a  judgment  in  a  case  where  the  offence 
charged  against  the  prisoner  consists  in  an  act  done  in  pursuance 
of  a  law  of  the  United  States  and  by  virtue  of  its  authority,  and 
where  the  imprisonment  of  the  party  is  in  violation  of  the  Constitu- 
tion and  laws  of  the  United  States,  is  clear  by  its  express  language. 
*  *  *  * 

I 

The  same  answer  is  given  in  the  present  case.  To  the  objection 
made  in  argument,  that  the  prisoner  is  discharged  by  this  writ  from 
the  power  of  the  State  court  to  try  him  for  the  whole  offence,  the 
reply  is,  that  if  the  prisoner  is  held  in  the  State  court  to  answer  for 
an  act  which  he  was  authorized  to  do  by  the  law  of  the  United 
States,  which  it  was  his  duty  to  do  as  marshal  of  the  United  States, 
and  if  in  doing  that  act  he  did  no  more  than  what  was  necessary 
and  proper  for  him  to  do,  he  cannot  be  guilty  of  a  crime  under  the 
law  of  the  State  of  California.  When  these  things  are  shown,  it  is 
established  that  he  is  innocent  of  any  crime  against  the  laws  of  the 
State,  or  of  any  other  authority  whatever.  There  is  no  occasion 
for  any  further  trial  in  the  State  court,  or  in  any  court.  The 
Circuit  Court  of  the  United  States  was  as  competent  to  ascertain 
these  facts  as  any  other  tribunal,  and  it  was  not  at  all  necessary  that 
a  jury  should  be  impanelled  to  render  a  verdict  on  them.  It  is 
the  exercise  of  a  power  common  under  all  systems  of  criminal 
jurisprudence.  There  must  always  be  a  preliminary  examination 
by  a  committing  magistrate,  or  some  similar  authority,  as  to  whether 
there  is  an  offence  to  be  submitted  to  a  jury,  and  if  this  is  submitted 
in  the  first  instance  to  a  grand  jury,  that  is  still  not  the  right  of 
trial  by  jury  which  is  insisted  on  in  the  present  argument. 

The  result  at  which  we  have  arrived  upon  this  examination  is, 
that  in  the  protection  of  the  person  and  the  life  of  Mr.  Justice  Field 
while  in  the  discharge  of  his  official  duties,  Neagle  was  authorized 
to  resist  the  attack  of  Terry  upon  him ;  that  Neagle  was  correct  in 
the  belief  that  without  prompt  action  on  his  part  the  assault  of 
Terry  upon  the  judge  would  have  ended  in  the  death  of  the  latter; 
that  such  being  his  well-founded  belief,  he  was  justified  in  taking 
the  life  of  Terry,  as  the  only  means  of  preventing  the  death  of  the 
man  who  was  intended  to  be  his  victim;  that  in  taking  the  life  of 
Terry,  under  the  circumstances,  he  was  acting  under  the  authority 
of  the  law  of  the  United  States,  and  was  justified  in  so  doing;  and 
that  he  is  not  liable  to  answer  in  the  courts  of  California  on  account 
of  his  part  in  that  transaction. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  33 

We  therefore  affirm  the  judgment  of  the  Circuit  Court  author- 
izing his  discharge  from  the  custody  of  the  sheriff  of  San 
Joaquin  County. 


Note. — There  were  many  facts  and  circumstances  in  connection  with  the 
case  of  In  Re  Neagle  which  possess  great  interest  because  of  the  persons 
involved  therein,  and  yet  are  of  such  character  as  would  not  be  contained 
in  a  law  report  Mr.  Justice  Field  and  David  Terry  both  arrived  in  Cali- 
fornia during  the  days  of  the  gold  fever.  They  both  practiced  law  and  both 
entered  into  politics.  David  Terry  was  elected  Justice  of  the  Supreme  Court 
of  California  in  1855  and  resigned  on  September  12,  1859.  Stephen  J.  Field 
was  elected  a  Justice  of  the  same  court  and  became  Chief  Justice  upon  Judge 
Terry's  resignation.  The  two  men  were  associates,  therefore,  upon  the 
bench  during  two  years.  Judge  Terry  resigned  from  the  bench  to  enter 
the  Confederate  Army  during  the  Civil  War,  and  after  the  war  was  ended 
he  returned  to  the  practice  of  law  in  California.  Judge  Field  in  the  mean- 
time had  been  appointed  by  President  Lincoln  an  Associate  Justice  of  the 
United  States  Supreme  Court.  Judge  Terry  and  his  wife  were  interested  as 
defendants  in  a  bitter  litigation  in  the  United  States  Circuit  Court  in  California 
in  the  years  1883  to  1888.  On  September  3,  1888,  an  opinion  unfavorable  to 
Terry  and  his  wife  was  rendered  by  Justice  Field.  At  its  conclusion  Mrs. 
Terry  arose  in  the  court  room  and  cried  aloud  that  Justice  Field  had  been 
bought,  and  wanted  to  know  the  price  he  had  sold  himself  for.  Justice 
Field  directed  the  marshal  to  remove  her  from  the  court  room.  Thereupon 
Terry  attacked  the  marshal,  and  drew  a  bowie-knife  upon  him.  For  this 
conduct  Terry  and  his  wife  were  sentenced  to  imprisonment  for  contempt 
of  court.  From  that  time  until  his  death  the  denunciations  by  Terry  and  his 
wife  of  Mr.  Justice  Field  were  open,  frequent,  and  of  the  most  vindictive 
and  malevolent  character.  While  being  transported  from  San  Francisco  to 
Alameda,  where  they  were  imprisoned,  Mrs.  Terry  repeated  a  number  of 
times  that  she  would  kill  Judge  Field.  So  much  impressed  were  the  friends 
of  Judge  Field,  and  of  public  justice,  both  in  California  and  in  Washington, 
with  the  fear  that  he  would  fall  a  sacrifice  to  the  resentment  of  Terry  and 
his  wife,  that  application  was  made  to  the  Attorney-General  of  the  United 
States  suggesting  the  propriety  of  his  furnishing  some  protection  to  the 
Judge  while  in  California.  This  resulted  in  a  correspondence  between  the 
Attorney-General  of  the  United  States,  the  District  Attorney,  and  the  marshal 
of  the  Northern  District  of  California  on  that  subject,  the  result  of  which 
was  that  Mr.  Neagle  was  appointed  a  deputy  marshal  for  the  Northern 
District  of  California,  and  given  special  instructions  to  attend  upon  Judge 
Field  both  in  court  and  while  going  from  one  court  to  another,  and  protect 
him  from  any  assault  that  might  be  attempted  upon  him  by  Terry  and  wife. 
Accordingly,  when  Judge  Field  went  from  San  Francisco  to  Los  Angeles 
to  hold  the  Circuit  Court  of  the  United  States  at  that  place,  Mr.  Neagle 
accompanied  him,  remained  with  him  for  the  few  days  that  he  was  engaged 
in  the  business  of  that  court,  and  entered  the  train  to  return  with  him  to 
San  Francisco.  While  the  sleeping  car,  in  which  were  Justice  Field  and  Mr. 
Neagle,  stopped  a  moment  in  the  early  morning  at  Fresno,  Terry  and  wife 
got  on  the  train.  The  fact  that  they  were  on  the  train  became  known  to 
Neagle,  and  he  held  a  conversation  with  the  conductor  as  to  what  peace 


34  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

officers  could  be  found  at  Lathrop,  where  the  train  stopped  for  breakfast, 
and  the  conductor  was  requested  to  telegraph  to  the  proper  officers  of  that 
place  to  have  a  constable  or  some  peace  officer  on  the  ground  when  the 
train  should  arrive,  anticipating  that  there  might  be  violence  attempted  by 
Terry  upon  Judge  Field.  This  resulted  in  no  available  aid  to  assist  in 
keeping  the  peace. 

When  the  train  arrived,  Neagle  informed  Judge  Field  of  the  presence 
of  Terry  on  the  train,  and  advised  him  to  remain  and  take  his  breakfast 
in  the  car.  This  the  Judge  refused  to  do,  and  he  and  Neagle  got  out  of 
the  car  and  went  into  the  dining  room,  and  took  seats  beside  each  other 
in  the  place  assigned  them  by  the  person  in  charge  of  the  breakfast  room. 
The  occurrences  following  hereupon  were  testified  to  by  Judge  Field  as 
follows :  "A  few  minutes  afterwards  Judge  Terry  and  his  wife  came  in. 
When  Mrs.  Terry  saw  me,  which  she  did  directly  she  got  diagonally  opposite 
me,  she  wheeled  around  suddenly,  and  went  out  in  great  haste.  I  after- 
wards understood,  as  you  heard  here,  that  she  went  for  her  satchel.  Judge 
Terry  walked  past,  opposite  to  me,  and  took  his  seat  at  the  second  table 
below.  The  only  remark  I  made  to  Mr.  Neagle  was :  There  is  Judge  Terry 
and  his  wife.'  He  remarked :  'I  see  him.'  Not  another  word  was  said.  I 
commenced  eating  my  breakfast.  It  seems,  however,  that  he  came  round 
back  of  me — I  did  not  see  him — and  he  struck  me  a  violent  blow  in  the 
face,  followed  instantaneously  by  another  blow.  Coming  so  immediately 
together,  the  two  blows  seemed  like  one  assault.  I  heard  'Stop !  stop !'  cried 
by  Neagle.  Of  course,  I  was  for  a  moment  dazed  by  the  blows.  I  turned 
my  head  round,  and  I  saw  that  great  form  of  Terry's,  with  his  arm  raised, 
and  his  fists  clenched  to  strike  me.  I  felt  that  a  terrific  blow  was  coming, 
and  his  arm  was  descending  in  a  curved  way,  as  though  to  strike  the  side 
of  my  temple,  when  I  heard  Neagle  cry  out,  'Stop!  stop!  I  am  an  officer.' 
Instantly  two  shots  followed.  I  can  only  explain  the  second  shot  from 
the  fact  that  he  did  not  fall  instantly.  I  did  not  get  up  from  my  seat, 
although  it  is  proper  for  me  to  say  that  a  friend  of  mine  thinks  that  I 
did;  but  I  did  not.  I  looked  around,  and  saw  Terry  on  the  floor.  I  looked 
at  him,  and  saw  that  peculiar  movement  of  the  eyes  that  indicates  the  presence 
of  death.  Of  course,  it  was  a  great  shock  to  me.  It  is  impossible  for  any 
•one  to  see  a  man  in  the  full  vigor  of  life,  with  all  those  faculties  that 
constitute  life,  instantly  extinguished,  without  being  affected;  and  I  was. 
I  looked  at  him  for  a  moment,  then  rose  from  my  seat,  went  around,  and 
looked  at  him  again,  and  passed  on."  Neagle  was  arrested  immediately,  as 
was  also  Justice  Field,  though  the  latter  was  soon  released,  by  the  authorities 
of  the  State  of  California.  The  result  of  Neagle's  effort  to  obtain  his 
release  resulted  in  the  now  famous  case. 


IN  RE  DEBS. 
158  U.  S.,  564.     1894. 

In   May  of   1894,  there  arose  a  dispute  between  the   Pullman 
Palace  Car  Company  and  its  employees  which  resulted  in  a  strike 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  35 

of  the  employees  of  the  company.  The  officers  of  the  railway 
union  tried  to  force  a  settlement  of  differences  by  creating  a  boycott 
against  the  cars  of  the  company,  and  had  prevented  certain  railroads 
running  out  of  Chicago  from  operating  their  trains  and  were  com- 
bining to  extend  such  boycott  by  causing  strikes  among  employees 
of  all  railroads  hauling  Pullman  cars.  A  bill  of  complaint  was 
filed  on  July  2,  1894,  by  the  United  States  in  the  Circuit  Court  of 
the  United  States  in  Illinois  against  Eugene  Debs  and  others  who 
were  the  officers  and  leaders  of  the  labor  organizations  of  the  em- 
ployees. The  complaint  was  that  twenty-two  railroads  were  en- 
gaged in  interstate  commerce,  into  and  out  of  the  city  of  Chicago ; 
that  each  of  the  roads  was  under  contract  to  carry  the  mails,  and 
were  post  roads  of  the  government;  that  they  were  required  also 
to  carry  the  troops  and  military  forces  of  the  United  States.  An 
injunction  was  issued  by  the  court  restraining  the  defendants  and 
all  persons  conspiring  with  them  from  interfering,  hindering  or 
obstructing  the  business  of  the  railroads  as  interstate  carriers  and 
carriers  of  mail.  This  injunction  was  duly  served  upon  the  de- 
fendants. Subsequently,  on  July  17,  1894,  an  attachment  for  con- 
tempt of  court  was  issued  against  the  officers  of  the  railway  union 
and  others  because  of  their  disobedience  to  the. said  order  of  the 
court,  and  after  a  hearing  they  were  sentenced  to  imprisonment. 
Having  been  committed  to  jail,  they  applied  to  the  Supreme  Court 
for  a  writ  of  habeas  corpus  in  order  to  test  the  legality  of  their 
confinement. 

MR.  JUSTICE  BREWER  delivered  the  opinion  of  the  court : 

Under  the  power  vested  in  Congress  to  establish  postoffices  and 
post  roads,  Congress  has,  by  a  mass  of  legislation,  established  the 
great  postoffice  system  of  the  country,  with  all  its  details  of  organ- 
ization, its  machinery  for  the  transaction  of  business,  defining  what 
shall  be  carried  and  what  not,  and  the  prices  of  carriage,  and  also 
prescribing  penalties  for  all  offenses  against  it.  Obviously  these 
powers  given  to  the  national  government  over  interstate  commerce, 
and  in  respect  to  the  transportation  of  the  mails  were  not  dormant 
and  unused.  Congress  had  taken  hold  of  these  two  matters,  and  by 
various  and  specific  acts  had  assumed  and  exercised  the  powers 
given  to  it,  and  was  in  full  discharge  of  its  duty  to  regulate  inter- 
state commerce  and  carry  the  mails.  As,  under  the  Constitution, 
power  over  interstate  commerce  and  the  transportation  of  the  mails 
is  vested  in  the  national  government,  and  Congress  by  virtue  of 
such  grant  has  assumed  actual  and  direct  control,  it  follows  that 
the  national  government  may  prevent  any  unlawful  and  forcible 
interference  therewith.  *  *  *  Have  the  vast  interests  of  the 
nation  in  interstate  commerce,  and  in  the  transportation  of  the 
mails,  no  other  protection  than  lies  in  the  possible  punishment  of 
those  who  interfere  with  it?  *  *  *  The  entire  strength  of  the 
nation  may  be  used  to  enforce  in  any  part  of  the  land  the  full  and 
free  exercise  of  all  national  powers  and  the  security  of  all  rights 
-entrusted  by  the  Constitution  to  its  care.  The  strong  arm  of  the 


36  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

national  government  may  be  put  forth  to  brush  away  all  obstruc- 
tions to  the  freedom  of  interstate  commerce  or  the  transportation 
of  the  mails.  If  the  emergency  arises,  the  army  of  the  nation,  and 
all  its  militia  are  at  the  service  of  the  nation  to  compel  obedience 
to  its  laws.  *  *  *  So,  in  the  case  before  us,  the  right  to  use 
force  does  not  exclude  the  right  of  appeal  to  the  courts  for  a  judi- 
cial determination  and  for  the  exercise  of  all  their  powers  of  pre- 
vention. *  *  *  Summing  up  our  conclusion,  we  hold  that  the 
government  of  the  United  States  is  one  having  jurisdiction  over 
every  foot  of  soil  within  its  territory,  and  acting  directly  upon  each 
citizen;  *  *  *  that  to  it  is  committed  power  over  interstate 
commerce  and  the  transmission  of  the  mail;  *  *  *  that  in  the 
exercise  of  those  powers  it  is  competent  for  the  nation  to  remove 
all  obstructions  upon  highways,  natural  or  artificial,  to  the  passage 
of  interstate  commerce  or  the  carrying  of  the  mail;  that  while  it 
may  be  competent  for  the  government  (through  the  executive  branch 
and  in  the  use  of  the  entire  executive  power  of  the  nation)  to 
forcibly  remove  all  such  obstructions,  it  is  equally  within  its  com- 
petency to  appeal  to  the  civil  courts  for  an  inquiry  and  determina- 
tion as  to  the  existence  and  character  of  any  alleged  obstructions, 
and  if  such  are  found  to  exist,  or  threaten  to  occur,  to  invoke  the 

powers  of  those  courts  to  remove  or  restrain  such  obstructions. 
*  *  *  * 

The  petition  for  a  writ  of  habeas  corpus  is  denied. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  37 

Section  4, 
THE  PRESIDENT'S  PARDONING  POWER. 

EX  PARTE  GARLAND. 
4  WALLACE,   333.     1866. 

The  petitioner,  A.  H.  Garland,*  was  an  attorney  and  a  citizen  of 
Arkansas.  In  May,  1861,  Arkansas  purported  to  withdraw  from 
the  Union  and  attach  itself  to  the  Confederate  States.  The  peti- 
tioner followed  the  State  and  was  one  of  its  representatives  in  the 
Congress  of  the  Confederacy.  In  July,  1865,  he  received  from  the 
President  of  the  United  States  a  full  pardon  for  all  offences  com- 
mitted by  his  participation,  direct  or  implied,  in  the  rebellion.  On 
July  2,  1862,  Congress  passed  an  act  prescribing  an  oath  to  be 
taken  by  every  person  elected  or  appointed  to  any  office  of  honor 
or  profit  in  the  United  States.  On  January  24,  1865,  Congress,  by 
a  supplementary  act,  extended  its  provisions  to  attorneys  of  the 
courts  of  the  United  States.  One  of  the  sentences  in  the  prescribed 
oath  was,  "that  he  has  not  voluntarily  given  aid,  countenance,  coun- 
sel, or  encouragement  to  persons  engaged  in  armed  hostility  to 
the  United  States."  Garland  produced  his  pardon  and  petitioned 
the  Supreme  Court  for  leave  to  practice  as  an  attorney  before  the 
court. 

MR.  JUSTICE  FIELD  delivered  the  opinion  of  the  court. 

The  statute  is  directed  against  parties  who  have  offended  in  any 
of  the  particulars  embraced  by  these  clauses.  And  its  object  is  to 
exclude  them  from  the  profession  of  the  law,  or  at  least  from  its 
practice  in  the  courts  of  the  United  States.  As  the  oath  prescribed 
cannot  be  taken  by  these  parties,  the  act,  as  against  them,  operates 
as  a  legislative  decree  of  perpetual  exclusion.  And  exclusion  from 
any  of  the  professions  or  any  of  the  ordinary  avocations  of  life  for 
past  conduct  can  be  regarded  in  no  other  light  than  as  punishment 
for  such  conduct.  The  exaction  of  the  oath  is  the  mode  provided 
for  ascertaining  the  parties  upon  whom  the  act  is  intended  to  oper- 
ate, and  instead  of  lessening,  increases  its  objectionable  character. 
All  enactments  of  this  kind  partake  of  the  nature  of  bills  of  pains 
and  penalties,  and  are  subject  to  the  constitutional  inhibition  against 
the  passage  of  bills  of  attainder,  under  which  general  designation 
they  are  included. 

In  the  exclusion  which  the  statute  adjudges,  it  imposes  a  punish- 
ment for  some  of  the  acts  specified  which  were  not  punishable  at 
the  time  they  were  committed;  and  for  other  of  the  acts  it  adds  a 
new  punishment  to  that  before  prescribed,  and  it  is  thus  brought 


*  The  petitioner,  A.  H.  Garland,  was  afterwards  Attorney-General  of  the 
United  States  in  the  Cabinet  of  President  Cleveland. 


RFI  ATIONS 


38  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

within  the  further  inhibition  of  the  Constitution  against  the  passage 
of  an  ex  post  facto  law.  *  *  *  * 

The  profession  of  an  attorney  and  counsellor  is  not  like  an  office 
created  by  an  act  of  Congress,  which  depends  for  its  continuance, 
its  powers,  and  its  emoluments  upon  the  will  of  its  creator,  and  the 
possession  of  which  may  be  burdened  with  any  conditions  not  pro- 
hibited by  the  Constitution.  Attorneys  and  counsellors  are  not 
officers  of  the  United  States;  they  are  not  elected  or  appointed  in 
the  manner  prescribed  by  the  Constitution  for  the  election  and 
appointment  of  such  officers.  They  are  officers  of  the  court,  ad- 
mitted as  such  by  its  order,  upon  evidence  of  their  possessing  suffi- 
cient legal  learning  and  fair  private  character.  It  has  been  the 
general  practice  in  this  country  to  obtain  this  evidence  by  an  ex- 
amination of  the  parties.  In  this  court  the  fact  of  the  admission  of 
such  officers  in  the  highest  court  of  the  States  to  which  they  re- 
spectively belong,  for  three  years  preceding  their  application,  is 
regarded  as  sufficient  evidence  of  the  possession  of  the  requisite 
legal  learning,  and  the  statement  of  counsel  moving  their  admission 
sufficient  evidence  that  their  private  and  professional  character  is 
fair.  The  order  of  admission  is  the  judgment  of  the  court  that  the 
parties  possess  the  requisite  qualifications  as  attorney  and  coun- 
sellors, and  are  entitled  to  appear  as  such  and  conduct  causes  therein. 
From  its  entry  the  parties  become  officers  of  the  court,  and  are 
responsible  to  it  for  professional  misconduct.  They  hold  their 
office  during  good  behavior,  and  can  only  be  deprived  of  it  for  mis- 
conduct ascertained  and  declared  by  the  judgment  of  the  court  after 
opportunity  to  be  heard  has  been  afforded.  *  *  *  * 

The  attorney  and  counsellor  being,  by  the  solemn  judicial  act  of 
the  court,  clothed  with  his  office,  does  not  hold  it  as  a  matter  of 
grace  and  favor.  The  right  which  it  confers  upon  him  to  appear 
for  suitors,  and  to  argue  causes,  is  something  more  than  a  mere 
indulgence,  revocable  at  the  pleasure  of  the  court,  or  at  the  com- 
mand of  the  legislature.  It  is  a  right  of  which  he  can  only  be  de- 
prived by  the  judgment  of  the  court,  for  moral  or  professional 
delinquency. 

The  legislature  may  undoubtedly  prescribe  qualifications  for  the 
office,  to  which  he  must  conform,  as  it  may,  where  it  has  exclusive 
jurisdiction,  prescribe  qualifications  for  the  pursuit  of  any  of  the 
ordinary  avocations  of  life.  The  question,  in  this  case,  is  not  as  to 
the  power  of  Congress  to  prescribe  qualifications,  but  whether  that 
power  has  been  exercised  as  a  means  for  the  infliction  of  punish- 
ment, against  the  prohibition  of  the  Constitution.  That  this  result 
cannot  be  effected  indirectly  by  a  State  under  the  form  of  creating 
qualifications  we  have  held  in  the  case  of  Cummings  if.  The  State 
of  Missouri  (4  Wall.  277),  and  the  reasoning  by  which  that  conclu- 
sion was  reached  applies  equally  to  similar  action  on  the  part  of 
Congress. 

This  view  is  strengthened  by  a  consideration  of  the  effect  of  the 
pardon  produced  by  the  petitioner,  and  the  nature  of  the  pardoning 
power  of  the  President. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  39 

The  Constitution  provides  that  the  President  "shall  have  power 
to  grant  reprieves  and  pardons  for  offences  against  the  United 
States,  except  in  cases  of  impeachment."  Article  II,  Sec.  2. 

The  power  thus  conferred  is  unlimited,  with  the  exception  stated. 
It  extends  to  every  offence  known  to  the  law,  and  may  be  exercised 
at  any  time  after  its  commission,  either  before  legal  proceedings  are 
taken,  or  during  their  pendency,  or  after  conviction  and  judgment. 
This  power  of  the  President  is  not  subject  to  legislative  control. 
Congress  can  neither  limit  the  effect  of  his  pardon,  nor  exclude 
from  its  exercise  any  class  of  offenders.  The  benign  prerogative  of 
mercy  reposed  in  him  cannot  be  fettered  by  any  legislative  restric- 
tions. 

Such  being  the  case,  the  inquiry  arises  as  to  the  effect  and  oper- 
ation of  a  pardon,  and  on  this  point  the  authorities  concur.  A 
pardon  reaches  both  the  punishment  prescribed  for  the  offence  and 
the  guilt  of  the  offender ;  and  when  the  pardon  is  full,  it  releases  the 
punishment  and  blots  out  of  existence  the  guilt,  so  that  in  the  eye 
of  the  law  the  offender  is  as  innocent  as  if  he  had  never  committed 
the  offence.  If  granted  before  conviction,  it  prevents  any  of  the 
penalties  and  disabilities  consequent  upon  conviction  from  attaching ; 
if  granted  after  conviction,  it  removes  the  penalties  and  disabilities, 
and  restores  him  to  all  his  civil  rights ;  it  makes  him,  as  it  were,  a 
new  man,  and  gives  him  a  new  credit  and  capacity. 

There  is  only  this  limitation  to  its  operation;  it  does  not  restore 
offices  forfeited,  or  property  or  interests  vested  in  others  in  conse- 
quence of  the  conviction  and  judgment. 

The  pardon  produced  by  the  petitioner  is  a  full  pardon  "for  all 
offences  by  him  committed,  arising  from  participation,  direct  or  im- 
plied, in  the  Rebellion,"  and  is  subject  to  certain  conditions  which 
have  been  complied  with.  The  effect  of  this  pardon  is  to  relieve  the 
petitioner  from  all  penalties  and  disabilities  attached  to  the  offence 
of  treason  committed  by  his  participation  in  the  Rebellon.  So  far 
as  that  offence  is  concerned,  he  is  thus  placed  beyond  the  reach  of 
punishment  of  any  kind.  But  to  exclude  him,  by  reason  of  that 
offence,  from  continuing  in  the  enjoyment  of  a  previously  acquired 
right,  is  to  enforce  a  punishment  for  that  offence  notwithstanding 
the  pardon.  If  such  exclusion  can  be  effected  by  the  exaction  of  an 
expurgatory  oath  covering  the  offence,  the  pardon  may  be  avoided, 
and  that  accomplished  indirectly  which  cannot  be  reached  by  direct 
legislation.  It  is  not  within  the  constitutional  power  of  Congress 
thus  to  inflict  punishment  beyond  the  reach  of  executive  clemency. 
From  the  petitioner,  therefore,  the  oath  required  by  the  act  of  Janu- 
ary 24th,  1865,  could  not  be  exacted,  even  if  that  act  were  not  sub- 
ject to  any  other  objection  than  the  one  thus  stated. 

It  follows,  from  the  views  expressed,  that  the  prayer  of  the  peti- 
tioner must  be  granted. 

Note.— Set  also  Cummings  v.  Missouri,  4  Wall,  227;  Ex  parte  Wells,  18 
Howard,  307,  for  further  cases  upon  the  same  principle. 


4O  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Section  5. 
THE  PRESIDENT'S  MILITARY  POWER. 

LUTHER  v.  BORDEN. 
7  HOWARD,  1.     1848. 

At  the  time  of  the  American  Revolution,  Rhode  Island  did  not, 
as  did  the  other  States,  adopt  a  new  Constitution,  but  continued 
the  form  of  government  established  by  the  charter  of  Charles  II 
in  1663,  making  only  such  alterations  by  acts  of  the  Legislature  as 
were  necessary  to  adapt  it  to  its  conditions  and  rights  as  an  inde- 
pendent State.  Many  citizens  became  dissatisfied  with  the  charter 
government.  A  convention  was  called  to  draw  up  a  new  Consti- 
tution, to  be  submitted  to  the  people  of  the  State  and  a  vote  taken 
upon  it.  On  the  return  of  the  votes,  the  convention  declared  that 
the  Constitution  was  adopted  and  ratified  by  a  majority  of  the 
people  of  the  State.  Elections  for  Governor,  members  of  the  Leg- 
islature and  other  offices  were  then  held.  These  officers  assembled 
and  proceeded  to  organize  the  new  government.  The  charter  gov- 
ernment did  not  acquiesce  in  the  proceedings,  but  passed  laws  de- 
claring void  the  new  Constitution,  put  the  State  under  martial  law 
and  called  out  the  militia.  The  house  of  the  plaintiff,  Martin 
Luther,  was  broken  into  in  order  to  arrest  him  for  supporting  the 
authority  of  the  new  government.  This  suit  was  an  action  of 
trespass  by  him  against  the  defendants,  who  were  in  the  military 
service  of  the  charter  government.  The  defence  was  that  the  acts 
were  justified  on  the  ground  of  the  insurrection  and  because  they 
were  in  the  military  service  of  the  State.  The  plaintiff  replied  that 
the  trespass  was  committed  by  the  defendants  of  their  own  proper 
wrong,  as  the  charter  government  no  longer  existed. 

The  issue  was  then  raised  as  to  which  government  was  the  legally 
constituted  one.  A  verdict  in  favor  of  the  old  government  and 
the  defendants  in  this  suit  was  rendered  in  the  United  States  Circuit 
Court.  An  appeal  was  taken  to  the  Supreme  Court. 

CHIEF  JUSTICE  TANEY  delivered  the  opinion. 

The  question  which  the  plaintiff  proposed  to  raise  by  the  testi- 
mony he  offered  has  not  heretofore  been  recognized  as  a  judicial 
one  in  any  of  the  State  courts.  In  forming  the  constitutions  of 
the  different  States,  after  the  Declaration  of  Independence,  and  in 
the  various  changes  and  alterations  which  have  since  been  made,  the 
political  department  has  always  determined  whether  the  proposed 
constitution  or  amendment  was  ratified  or  not  by  the  people  of  the 
State,  and  the  judicial  power  has  followed  its  decision.  In  Rhode 
Island,  the  question  has  been  directly  decided.  Prosecutions  were 
there  instituted  against  some  of  the  persons  who  had  been  active  in 
the  forcible  opposition  to  the  old  government.  And  in  more  than 
one  of  the  cases  evidence  was  offered  on  the  part  of  the  defence  sim- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  41 

ilar  to  the  testimony  offered  in  the  Circuit  Court,  and  for  the  same 
purpose,  that  is,  for  the  purpose  of  showing  that  the  proposed  con- 
stitution had  been  adopted  by  the  people  of  Rhode  Island,  and  had, 
therefore,  become  the  established  government,  and  consequently  that 
the  parties  accused  were  doing  nothing  more  than  their  duty  in 
endeavoring  to  support  it. 

But  the  courts  uniformly  held  that  the  inquiry  proposed  to  be 
made  belonged  to  the  political  power  and  not  to  the  judicial ;  that  it 
rested  with  the  political  power  to  decide  whether  the  charter  gov- 
ernment had  been  displaced  or  not;  and  when  that  decision  was 
made,  the  judicial  department  would  be  bound  to  take  notice  of  it 
as  the  paramount  law  of  the  State,  without  the  aid  of  oral  evidence 
or  the  examination  of  witnesses;  that,  according  to  the  laws  and 
institutions  of  Rhode  Island,  no  such  change  had  been  recognized 
by  the  political  power ;  and  that  the  charter  government  was  the 
lawful  and  established  government  of  the  State  during  the  period 
in  contest,  and  that  those  who  were  in  arms  against  it  were  insur- 
gents, and  liable  to  punishment.  *  *  *  * 

Moreover,  the  Constitution  of  the  United  States,  as  far  as  it  has 
provided  for  an  emergency  of  this  kind,  and  authorized  the  general 
government  to  interfere  in  the  domestic  concerns  of  a  State,  has 
treated  the  subject  as  political  in  its  nature,  and  placed  the  power  in 
the  hands  of  that  department. 

The  fourth  section  of  the  fourth  article  of  the  Constitution  of  the 
United  States  provides  that  the  United  States  shall  guarantee  to 
every  State  in  the  Union  a  republican  form  of  government,  and 
shall  protect  each  of  them  against  invasion;  and  on  the  application 
of  the  legislature  or  of  the  executive  (when  the  legislature  cannot 
be  convened)  against  domestic  violence. 

Under  this  article  of  the  Constitution  it  rests  with  Congress  to 
decide  what  government  is  the  established  one  in  a  State.  For  as 
the  United  States  guarantee  to  each  State  a  republican  government, 
Congress  must  necessarily  decide  what  government  is  established 
in  the  State  before  it  can  determine  whether  it  is  republican  or  not. 
And  when  the  senators  and  representatives  of  a  State  are  admitted 
into  the  council  of  the  Union,  the  authority  of  the  government 
under  which  they  are  appointed,  as  well  as  its  republican  character, 
is  recognized  by  the  proper  constitutional  authority.  And  its  deci- 
sion is  binding  on  every  other  department  of  the  government,  and 
could  not  be  questoned  in  a  judicial  tribunal.  It  is  true  that  the 
contest  in  this  case  did  not  last  long  enough  to  bring  the  matter  to 
this  issue.  *  *  *  Congress  was  not  called  upon  to  decide  the 
controversy.  Yet  the  right  to  decide  was  placed  there,  and  not  in 
the  courts. 

So,  too,  as  relates  to  the  clause  in  the  above-mentioned  article  of 
the  Constitution,  providing  for  cases  of  domestic  violence.  It  rested 
with  Congress,  too,  to  determine  upon  the  means  proper  to  be 
adopted  to  fulfill  this  guarantee.  They  might,  if  they  had  deemed 
it  most  advisable  to  do  so,  have  placed  it  in  the  power  of  a  court 


42  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

to  decide  when  the  contingency  had  happened  which  required  the 
Federal  Government  to  interfere.  But  Congress  thought  other- 
wise, and  no  doubt  wisely;  and  by  the  act  of  February  28,  1795, 
provided,  that,  "in  case  of  an  insurrection  in  any  State  against  the 
government  thereof,  it  shall  be  lawful  for  the  President  of  the 
United  States,  on  application  of  the  legislature  of  such  State  or  of 
the  executive,  when  the  legislature  cannot  be  convened,  to  call  forth 
such  number  of  the  militia  of  any  other  State  or  States,  as  may  be 
applied  for,  as  he  may  judge  sufficient  to  suppress  such  insurrec- 
tion." 

By  this  act,  the  power  of  deciding  whether  the  exigency  had 
arisen  upon  which  the  government  of  the  United  States  is  bound 
to  interfere,  is  given  to  the  President.  He  is  to  act  upon  the  ap- 
plication of  the  legislature,  or  of  the  executive,  and  consequently 
he  must  determine  what  body  of  men  constitute  the  legislature,  and 
who  is  the  governor,  before  he  can  act.  The  fact  that  both  parties 
claim  the  right  to  the  government  cannot  alter  the  case,  for  both 
cannot  be  entitled  to  it.  If  there  is  an  armed  conflict,  like  the  one 
of  which  we  are  speaking,  it  is  a  case  of  domestic  violence,  and 
one  of  the  parties  must  be  in  insurrection  against  the  lawful  gov- 
ernment. And  the  President  must,  of  necessity,  decide  which  is 
the  government,  and  which  party  is  unlawfully  arrayed  against  it, 
before  he  can  perform  the  duty  imposed  upon  him  by  the  act  of 
Congress. 

After  the  President  has  acted  and  called  out  the  militia,  is  a  Cir- 
cuit Court  of  the  United  States  authorized  to  inquire  whether  his 
decision  was  right  ?  Could  the  court,  while  the  parties  were  actually 
contending  in  arms  for  the  possession  of  the  government,  call  wit- 
nesses before  it,  and  inquire  which  party  represented  a  majority 
of  the  people?  If  it  could,  then  it  would  become  the  duty  of  the 
court  (provided  'it  came  to  the  conclusion  that  the  President  had 
decided  incorrectly)  to  discharge  those  who  were  arrested  or  de- 
tained by  the  troops  in  the  service  of  the  United  States,  or  the 
government  which  the  President  was  endeavoring  to  maintain.  If 
the  judicial  power  extends  so  far,  the  guarantee  contained  in  the 
Constitution  of  the  United  States  is  a  guarantee  of  anarchy,  and 
not  of  order.  Yet  if  this  right  does  not  reside  in  the  courts,  when 
the  conflict  is  raging — if  the  judicial  power  is,  at  that  time,  bound 
to  follow  the  decision  of  the  political,  it  must  be  equally  bound 
when  the  contest  is  over.  It  cannot,  when  peace  is  restored,  pun- 
ish as  offences  and  crimes  the  acts  which  it  before  recognized,  and 
was  bound  to  recognize,  as  lawful. 

It  is  true  that  in  this  case  the  militia  were  not  called  out  by  the 
President.  But  upon  the  application  of  the  governor  under  the 
charter  government,  the  President  recognized  him  as  the  executive 
power  of  the  State,  and  took  measures  to  call  out  the  militia  to  sup- 
port his  authority,  if  it  should  be  found  necessary  for  the  general 
government  to  interfere ;  and  it  is  admitted  in  the  argument  that  it 
was  the  knowledge  of  this  decision  that  put  an  end  to  the  armed 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  43 

opposition  to  the  charter  government,  and  prevented  any  further 
efforts  to  establish  by  force  the  proposed  constitution.  The  inter- 
ference of  the  President,  therefore,  by  announcing  his  determina- 
tion, was  as  effectual  as  if  the  militia  had  been  assembled  under  his 
orders.  And  it  should  be  equally  authoritative.  For  certainly  no 
court  of  the  United  States,  with  a  knowledge  of  this  decision, 
would  have  been  justified  in  recognizing  the  opposing  party  as  the 
lawful  government,  or  in  treating  as  wrongdoers  or  insurgents  the 
officers  of  the  government  which  the  President  had  recognized, 
and  was  prepared  to  support  by  an  armed  force.  In  the  case  of 
foreign  nations,  the  government  acknowledged  by  the  President  is 
always  recognized  in  the  courts  of  justice.  And  this  principle  has 
been  applied  by  the  act  of  Congress  to  the  sovereign  State  of  the 
Union. 

It  is  said  that  this  power  in  the  President  is  dangerous  to  liberty, 
and  may  be  abused.  All  power  may  be  abused,  if  placed  in  un- 
worthy hands.  But  it  would  be  difficult,  we  think,  to  point  out 
any  other  hands  in  which  this  power  would  be  more  safe,  and  at  the 
same  time  equally  effectual.  When  citizens  of  the  same  State  are 
in  arms  against  each  other,  and  the  constituted  authorities  unable 
to  execute  the  laws,  the  interposition  of  the  United  States  must 
be  prompt,  or  it  is  of  little  value.  The  ordinary  course  of  proceed- 
ings in  courts  of  justice  would  be  utterly  unfit  for  the  crisis.  And 
the  elevated  office  of  the  President,  chosen  as  he  is  by  the  people 
of  the  United  States,  and  the  high  responsibility  he  could  not  fail 
to  feel  when  acting  in  a  case  of  so  much  moment,  appear  to  furnish 
as  strong  safeguards  against  a  wilful  abuse  of  power  as  human 
prudence  and  foresight  could  well  provide.  At  all  events,  it  is  con- 
ferred upon  him  by  the  Constitution  and  laws  of  the  United  States, 
and  must,  therefore,  be  respected  and  enforced  in  its  judicial 
tribunals. 

Judgment  of  the  Circuit  Court  is  affirmed. 


44  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

CHAPTER  II. 

The  Legislative  Department 

Section  1. 
POWER  OF  CONGRESS  OVER  TAXATION. 

Sub-Section  A. 
EXTENT  OF  THE  FEDERAL  POWER. 

THE  COLLECTOR  v.  DAY. 
11  WALLACE,  113.    1870. 

This  suit  was  instituted  by  J.  M.  Day  against  the  Collector  of  In- 
ternal Revenue  of  the  United  States  to  recover  the  sum  of  sixty-one 
dollars  and  fifty  cents,  which  had  been  assessed  as  a  tax  upon  his 
salary  as  a  judge  of  the  Court  of  Probate  and  Insolvency  for  the 
County  of  Barnstable,  Massachusetts,  for  the  year  1866  and  1867. 
The  salary  was  fixed  by  law  and  was  paid  out  of  the  state  treasury. 
Day  paid  the  tax  under  protest  and  instituted  this  suit  to  recover  it. 
It  was  contended  that  the  Act  of  Congress  levying  the  tax  was  un- 
constitutional as  the  Federal  Government  could  not  impose  a  tax 
upon  the  salary  of  the  judicial  officer  of  a  State.*  A  judgment  was 
given  in  favor  of  Day  in  the  lower  court,  whereupon  an  appeal  was 
taken  to  the  Supreme  Court  of  the  United  States. 

MR.  JUSTICE  NELSON  delivered  the  opinion  of  the  court. 

The  case  presents  the  question  whether  or  not  it  is  competent  for 
Congress,  under  the  Constitution  of  the  United  States,  to  impose  a 
tax  upon  the  salary  of  a  judicial  officer  of  a  State. 

In  Dobbins  v.  the  Commissioners  of  Erie  County,  16  Peters,  435, 
it  was  decided  that  it  was  not  competent  for  the  legislature  of  a  State 
to  levy  a  tax  upon  the  salary  or  emoluments  of  an  officer  of  the 

*The  Acts  passed  in  1864,  1865,  1866,  1867  provided :  There  shall  be  levied 
collected  and  paid  annually  upon  the  gains,  profits  and  income  of  every  person 
residing  in  the  United  States, — whether  derived  from  any  kind  of  property, 
rents,  interest,  dividends  or  salaries,  or  from  any  profession,  trade,  employ- 
ment or  vocation,  carried  on  in  the  United  States  or  elsewhere,  or  from 
any  other  source  whatsoever,  a  tax  of  five  (5)  per  centum  on  the  amount 
so  derived,  over  $1,000. 

Compare  with  Income  Tax  Law  of  August  15th,  1894,  stated  in  case  of 
Pollock  v.  Farmers'  Loan  and  Trust  Company,  infra  page  57. 

Also  compare  Income  Tax  Law  of  October  3rd,  1913.  See  digest  thereof 
in  Appendix. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  45 

United  States.  The  decision  was  placed  mainly  upon  the  ground 
that  the  officer  was  a  means  or  instrumentality  employed  for  carry- 
ing into  effect  some  of  the  legitimate  powers  of  the  government, 
which  could  not  be  interfered  with  by  taxation  or  otherwise  by  the 
States,  and  that  the  salary  or  compensation  for  the  service  of  the 
officer  was  inseparably  connected  with  the  office;  that  if  the  officer, 
as  such,  was  exempt,  the  salary  assigned  for  his  support  or  main- 
tenance while  holding  the  office  was  also,  for  like  reasons,  equally 
exempt. 

The  cases  of  McCulloch  v.  Maryland,  4  Wheat..  316,  and  Weston 
•v.  Charleston,  2  Peters,  449,  were  referred  to  as  settling  the  prin- 
ciple that  governed  the  case,  namely,  "that  the  State  governments 
cannot  lay  a  tax  upon  the  constitutional  means  employed  by  the 
government  of  the  Union  to  execute  its  constitutional  powers." 

The  soundness  of  this  principle  is  happily  illustrated  by  the  Chief 
Justice  in  McCulloch  v.  Maryland,  4  Wheat.  432.  "If  the  States," 
he  observes,  "may  tax  one  instrument  employed  by  the  government 
in  the  execution  of  its  powers,  they  may  tax  any  and  every  other 
instrument.  They  may  tax  the  mail;  they  may  tax  the  mint;  they 
may  tax  the  patent-rights ;  they  may  tax  judicial  process ;  they  may 
tax  all  the  means  employed  by  the  government  to  an  excess  which 
would  defeat  all  the  ends  of  government."  "This,"  he  observes, 
"was  not  intended  by  the  American  people.  They  did  not  design  to 
make  their  government  dependent  on  the  States."  Again,  (Ib.  427.) 
"That  the  power  of  taxing  it  (the  bank)  by  the  States  may  be 
exercised  so  far  as  to  destroy  it,  is  too  obvious  to  be  denied."  And, 
in  Weston  v.  The  City  of  Charleston,  2  Peters,  466,  he  observes.  "If 
the  right  to  impose  the  tax  exists,  it  is  a  right  which,  in  its  nature, 
acknowledges  no  limits.  It  may  be  carried  to  any  extent  within  the 
jurisdiction  of  the  State  or  corporation  which  imposes  it  which  the 
will  of  each  State  and  corporation  may  prescribe."  *  *  *  * 

It  is  a  familiar  rule  of  construction  of  the  Constitution  of  the 
Union,  that  the  sovereign  powers  vested  in  the  State  governments 
by  their  respective  constitutions,  remained  unaltered  and  unimpair- 
ed, except  so  far  as  they  were  granted  to  the  government  of  the 
United  States.  That  the  intention  of  the  framers  of  the  Constitu- 
tion in  this  respect  might  not  be  misunderstood,  this  rule  of  inter- 
pretation is  expressly  declared  in  the  tenth  article  of  the  amend- 
ments, namely:  "The  powers  not  delegated  to  the  United  States 
are  reserved  to  the  States  respectively,  or,  to  the  people."  The  gov- 
ernment of  the  United  States,  therefore,  can  claim  no  powers 
which  are  not  granted  to  it  by  the  Constitution,  and  the  powers 
actually  granted  must  be  such  as  are  expressly  given,  or  given  by 
necessary  implication. 

The  general  government,  and  the  States,  although  both  exist 
within  the  same  territorial  limits,  are  separate  and  distinct  sov- 
ereignties, acting  separately  and  independently  of  each  other,  with- 
in their  respective  spheres.  The  former  in  its  appropriate  sphere  is 
supreme ;  but  the  States  within  the  limits  of  their  powers  not  granted, 


46  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

or,  in  the  language  of  the  tenth  amendment,  "reserved,"  are  as 
independent  of  the  general  government  as  that  government  within 
its  sphere  is  independent  of  the  States.  *  *  *  * 

Two  of  the  great  departments  of  the  government,  the  executive 
and  legislative,  depend  upon  the  exercise  of  the  powers,  or  upon  the 
people  of  the  States.  The  Constitution  guarantees  to  the  States  a 
republican  form  of  government,  and  protects  each  against  invasion 
or  tlomestic  violence.  Such  being  the  separate  and  independent 
condition  of  the  States  in  our  complex  system,  as  recognized  by  the 
Constitution,  and  the  existence  of  which  is  so  indispensable,  that, 
without  them,  the  general  government  itself  would  disappear  from 
the  family  of  nations,  it  would  seem  to  follow,  as  a  reasonable,  if 
not  a  necessary  consequence,  that  the  means  and  instrumentalities 
employed  for  carrying  on  the  operations  of  the  governments,  for 
preserving  their  existence,  and  fulfilling  the  high  and  responsible 
duties  assigned  to  them  in  the  Constitution,  should  be  left  free  and 
unimpaired,  should  not  be  liable  to  be  crippled,  much  less  defeated 
by  the  taxing  power  of  another  government,  which  power  acknowl- 
edges no  limits  but  the  will  of  the  legislative  body  imposing  the  tax. 
And,  more  especially,  those  means  and  instrumentalities  which  are 
the  creation  of  their  sovereign  and  reserved  rights,  one  of  which  is 
the  establishment  of  the  judicial  department,  and  the  appointment 
of  officers  to  administer  their  laws.  Without  this  power,  and  the 
exercise  of  it,  we  risk  nothing  in  saying  that  no  one  of  the  States 
under  the  form  of  government  guaranteed  by  the  Constitution 
could  long  preserve  its  existence.  A  despotic  government  might. 
We  have  said  that  one  of  the  reserved  powers  was  that  to  establish 
a  judicial  department;  it  would  have  been  more  accurate,  and  in 
accordance  with  the  existing  state  of  things  at  the  time,  to  have 
said  the  power  to  maintain  a  judicial  department.  All  of  the  thir- 
teen States  were  in  the  possession  of  this  power,  and  had  exercised 
it  at  the  adoption  of  the  Constitution ;  and  it  -is  not  pretended  that 
any  grant  of  it  to  the  general  government  is  found  in  that  instru- 
ment. It  is,  therefore,  one  of  the  sovereign  powers  vested  in  the 
States  by  their  constitutions,  which  remained  unaltered  and  unim- 
paired, and  in  respect  to  which  the  State  is  as  independent  of  the 
general  government  as  that  government  is  independent  of  the 
States.  *  *  *  * 

And  if  the  means  and  instrumentalities  employed  by  that  govern- 
ment to  carry  into  operation  the  powers  granted  to  it  are,  neces- 
sarily, and,  for  the  sake  of  self-preservation,  exempt  from  taxation 
by  the  States,  why  are  not  those  of  the  States  depending  upon 
their  reserved  powers,  for  like  reasons,  equally  exempt  from  Fed- 
eral taxation?  Their  unimpaired  existence  in  the  one  case  is  as  es- 
sential as  in  the  other.  It  is  admitted  that  there  is  no  express 
provision  in  the  Constitution  that  prohibits  the  general  government 
from  taxing  the  means  and  instrumentalities  of  the  States,  nor  is 
there  any  prohibiting  the  States  from  taxing  the  means  and  in- 
strumentalities of  that  government.  In  both  cases  the  exemption 
rests  upon  necessary  implication,  and  is  upheld  by  the  great  law 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  47 

of  self-preservation ;  as  any  government,  whose  means  employed  in 
conducting  its  operations,  if  subject  to  the  control  of  another  and 
distinct  government,  can  exist  only  at  the  mercy  of  that  govern- 
ment. Of  what  avail  are  these  means  if  another  power  may  tax 
them  at  discretion  ? 

But  we  are  referred  to  the  Veazie  Bank  v.  Fenno,  8  Wall,  533, 
in  support  of  this  power  of  taxation.  That  case  furnishes  a  strong 
illustration  of  the  position  taken  by  the  Chief  Justice  in  McCulloch 
v.  Maryland,  namely,  "That  the  power  to  tax  involves  the  power  to 
destroy." 

The  power  involved  was  one  which  had  been  exercised  by  the 
States  since  the  foundation  of  the  government,  and  had  been,  after 
the  lapse  of  three-quarters  of  a  century,  annihilated  from  excessive 
taxation  by  the  general  government,  just  as  the  judicial  office  in 
the  present  case  might  be,  if  subject,  at  all,  to  taxation  by  that  gov- 
ernment. But,  notwithstanding  the  sanction  of  this  taxation  by  a 
majority  of  the  court,  it  is  conceded,  in  the  opinion,  that  "the  re- 
served rights  of  the  States,  such  as  the  right  to  pass  laws;  to  give 
effect  to  laws  through  executive  action ;  to  administer  justice  through 
the  courts,  and  to  employ  all  necessary  agencies  for  legitimate  pur- 
poses of  State  government,  are  not  proper  subjects  of  the  taxing 
power  of  Congress.  This  concession  covers  the  case  before  us,  and 
adds  the  authority  of  this  court  in  support  of  the  doctrine  which 
we  have  endeavored  to  maintain.  Judgment  affirmed. 


'  Note.— In  U.  S.  v.  Baltimore  &  Ohio  Railroad  Co.,  17  Wallace  322  (1873) 
the  United  States  sought  to  collect  a  tax  under  the  Federal  Internal  Revenue 
Act  of  1864,  as  amended,  on  interest  payable  by  the  Baltimore  &  Ohio  Rail- 
road Company  to  the  City  of  Baltimore.  The  City  of  Baltimore,  with  a  view 
to  aid  its  commercial  prosperity,  loaned  the  railroad  $5,000,000  to  aid  it  in 
running  its  line  into  the  city,  and  took  as  security  a  mortgage  on  the  rail- 
road, on  which  the  interest  taxed  was  paid.  The  Supreme  Court  held  that 
this  amounted  to  a  tax  on  the  municipal  revenues  and  not  a  tax  upon  the 
railroad  and  could  not  be  collected. 

In  South  Carolina  v.  U.  S.  199  U.  S.  437  (1905)  the  same  court  held  that 
the  United  States  may  exact  the  license  taxes  prescribed  by  the  Internal  Reve- 
nue Laws  for  dealers  in  intoxicating  liquors  from  a  State  which  in  the  exer- 
cise of  its  sovereign  power  has  taken  charge  of  the  business  of  selling  such 
liquors.  The  court  reasoned  that  the  exemption  of  the  State  property  and  its 
functions  from  Federal  taxation  is  implied  from  the  dual  character  of  our 
Federal  system  and  the  necessity  of  preserving  the  State  in  all  its  efficiency, 
but  when  a  State  goes  outside  of  its  purely  governmental  functions  and  en- 
gages in  the  business  of  making  and  selling  things  it  becomes  subject  to  the 
Federal  taxing  power.  If  this  were  not  so  the  federal  taxing  power  would 
be  largely  crippled  by  the  absorption  by  the  States  of  certain  business,  such 
as  public  utilities,  tobacco  business,  etc. 


48  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

VEAZIE  BANK  v.  FENNO. 
8  WALLACE,  533.    1869. 

Congress  passed  an  act  on  July  13,  1866,  which  provided,  "That 
every  national  banking  association,  State  bank  or  State  banking  as- 
sociation shall  pay  a  tax  of  ten  per  centum  on  the  amount  of  notes 
of  any  person,  State  bank,  or  State  banking  association,  used  for 
circulation  and  paid  out  by  them  after  the  1st  day  of  August,  1866." 
Under  this  act  a  tax  of  ten  per  cent,  was  assessed  upon  the  Veazie 
Bank,  for  its  notes  issued  for  circulation,  after  the  day  named  in 
the  act.  The  bank  was  a  corporation  chartered  under  the  laws  of 
the  State  of  Maine,  with  authority  to  issue  bank  notes  for  circula- 
tion, and  the  notes  on  which  the  tax  imposed  by  the  act  was  col- 
lected, were  issue4  under  this  authority.  The  bank  paid  the  tax 
under  protest.  The  Circuit  Court  of  Maine,  in  which  action  was 
brought  to  recover  the  amount  of  the  tax  paid,  being  divided  in  its 
opinion,  the  case  was  brought  to  the  Supreme  Court  upon  the  ques- 
tion of  the  constitutionality  of  the  act  (1)  That  it  was  a  direct  tax 
and  had  not  been  apportioned  according  to  population  (2)  That 
the  act  imposing  the  tax  impairs  a  franchise  granted  by  the  State, 
and  that  Congress  has  no  power  to  pass  any  law  with  that  intent 
or  effect. 

The  opinion  was  delivered  by  CHIEF  JUSTICE  CHASE. 

*  *  *  *  Much  diversity  of  opinion  has  always  prevailed  upon 
the  question,  what  are  direct  taxes.  Attempts  to  answer  it  by  ref- 
erence to  the  definitions  of  political  economists  have  been  frequent- 
ly made,  but  without  satisfactory  results.  *  *  *  *  We  are  obliged, 
therefore,  to  resort  to  historical  evidence,  and  to  seek  the  meaning 
of  the  words  in  the  use  and  in  the  opinion  of  those  whose  relations 
to  the  government,  and  means  of  knowledge,  warranted  them  in 
speaking  with  authority.  And,  considered  in  this  light,  the  mean- 
ing and  application  of  the  rule,  as  to  direct  taxes,  appeals  to  us 
quite  clear.  It  is,  as  we  think,  distinctly  shown  in  every  act  of 
Congress  on  the  subject.  In  each  of  these  acts,  a  gross  sum  was 
laid  upon  the  United  States,  and  the  total  amount  was  apportioned 
to  the  several  States,  according  to  their  respective  numbers  of  in- 
habitants, as  ascertained  by  the  last  preceding  census.  Having  been 
apportioned,  provision  was  made  for  the  imposition  of  the  tax  upon 
the  subjects  specified  in  the  act  fixing  its  total  sum.  *  *  *  *  This 
review  shows  that  personal  property,  contracts,  occupations,  and 
the  like,  have  never  been  regarded  by  Congress  as  proper  subjects 
of  direct  tax.  *  *  *  *  It  may  be  rightly  affirmed,  therefore,  that 
in  the  practical  construction  of  the  Constitution  by  Congress,  direct 
taxes  have  been  limited  to  taxes  on  land  and  appurtenances,  and 
taxes  on  polls,  or  capitation  taxes.  *  *  *  *  The  tax  under  con- 
sideration is  a  tax  on  bank  circulation,  and  may  very  well  be  classed 
under  the*  head  of  duties.  Certainly  it  is  not,  in  the  sense  of 
the  Constitution,  a  direct  tax.  *  *  *  *  Is  it,  then,  a  tax  on  a  fran- 
chise granted  by  a  State,  which  Congress,  upon  any  principle  ex- 
empting the  reserved  powers  of  the  States  from  impairment  by  tax- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  49 

ation,  must  be  held  to  have  no  authority,  to  lay  and  collect  ?  We  do 
not  say  there  may  not  be  such  a  tax.  It  may  be  admitted  that  the 
reserved  rights  of  the  States,  such  as  the  right  to  pass  laws,  to 
give  effect  to  laws  through  executive  action,  to  administer  justice 
through  the  courts,  and  to  employ  all  necessary  agencies  for  le- 
gitimate purposes  of  State  government,  are  not  proper  subjects  of 
the  taxing  power  of  Congress.  But  it  cannot  be  admitted  that 
franchises  granted  by  a  State  are  necessarily  exempt  from  taxation ; 
for  franchises  are  property,  often  very  valuable  and  productive 
property,  and  when  not  conferred  for  the  purpose  of  giving  effect 
to  some  reserved  power  of  a  State,  seem  to  be  as  properly  objects 
of  taxation  as  any  other  property.  But  in  the  case  before  us,  the 
object  of  taxation  is  not  the  franchise,  but  property  created  or  con- 
tracts made  and  issued  under  the  franchise,  or  power  to  issue  bank 
bills.  *  *  *  *  It  is  insisted,  however,  that  the  tax  in  the  case 
before  us  is  excessive,  and  so  excessive  as  to  indicate  a  purpose  on 
the  part  of  Congress  to  destroy  the  franchise  of  the  bank,  and  is, 
therefore,  beyond  the  constitutional  power  of  Congress.  The  first 
answer  to  this  is  that  the  judicial  cannot  prescribe  to  the  legisla- 
tive departments  of  the  government  limitations  upon  the  exercise 
of  its  acknowledged  powers.  The  power  to  tax  may  be  exercised 
oppressively  upon  persons,  but  the  responsibility  of  the  legislature 
is  not  to  the  courts,  but  to  the  people  by  whom  its  members  are 
elected.  So  if  a  particular  tax  bears  heavily  upon  a  corporation,  or 
a  class  of  corporations,  it  cannot  for  that  reason  only  be  pronounced 
contrary  to  the  Constitution.  *  *  *  * 

But  there  is  another  answer  which  vindicates  equally  the  wisdom 
and  the  power  of  Congress. 

It  cannot  be  doubted  that  under  the  Constitution  the  power  to 
provide  a  circulation  of  coin  is  given  to  Congress.  And  it  is  set- 
tled by  the  uniform  practice  of  the  government  and  by  repeated 
decisions,  that  Congress  may  constitutionally  authorize  the  emis- 
sion of  bills  of  credit.  It  is  not  important  here  to  decide  whether 
the  quality  of  legal  tender,  in  payment  of  debts,  can  be  constitution- 
ally imparted  to  these  bills ;  it  is  enough  to  say  that  there  can  be  no 
question  of  the  power  of  the  government  to  emit  them;  to  make 
them  receivable  in  payment  of  debts  to  itself;  to  fit  them  for  use 
by  those  who  see  fit  to  use  them  in  all  the  transactions  of  commerce ; 
to  provide  for  their  redemption ;  to  make  them  a  currency,  uniform 
in  value  and  description,  and  convenient  and  useful  for  circulation. 
These  powers,  until  recently,  were  only  partially  and  occasionally 
exercised.  Lately,  however,  they  have  been  called  into  full  activity, 
and  Congress  has  undertaken  to  supply  a  currency  for  the  entire 
country. 

The  methods  adopted  for  the  supply  of  this  currency  were  brief- 
ly explained  in  the  first  part  of  this  opinion.  It  now  consists  of 
coin,  of  United  States  notes,  and  of  the  notes  of  the  national  banks. 
Both  descriptions  of  notes  may  be  properly  described  as  bills  of 
credit,  for  both  are  furnished  by  the  government;  both  are  issued 


50  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

on  the  credit  of  the  government;  and  the  government  is  responsi- 
ble for  the  redemption  of  both;  primarily  as  to  the  first  descrip- 
tion, and  immediately  upon  default  of  the  bank,  as  to  the  second. 
When  these  bills  shall  be  made  convertible  into  coin,  at  the  will  of 
the  holder,  this  currency  will  perhaps  satisfy  the  wants  of  the  com- 
munity, in  respect  to  a  circulating  medium,  as  perfectly  as  any  mix- 
ed currency  that  can  be  devised. 

Having  thus,  in  the  exercise  of  undisputed  constitutional  powers, 
undertaken  to  provide  a  currency  for  the  whole  country,  it  cannot 
be  questioned  that  Congress  may,  constitutionally,  secure  the  bene- 
fit of  it  to  the  people  by  appropriate  legislation.  To  this  end,  Con- 
gress has  denied  the  quality  of  legal  tender  to  foreign  coins,  and 
has  provided  by  law  against  the  imposition  of  counterfeit  and  base 
coin  on  the  community.  To  the  same  end,  Congress  may  restrain 
by  suitable  enactments,  the  circulation  as  money  of  any  notes  not 
issued  under  its  authority.  Without  this  power,  indeed,  its  at- 
tempts to  secure  a  sound  and  uniform  currency  for  the  country 
would  be  futile. 

Viewed  in  this  light,  as  well  as  in  ^he  other  light  of  a  duty  on 
contracts  or  property,  we  cannot  doubt  the  constitutionality  of  the 
tax  under  consideration. 

Sub-Section  B 
LIMITATIONS  OF  THE  STATE  POWER. 

M'CULLOCH  v.  MARYLAND. 
4  WHEATON,  316.    1819. 

In  1816  Congress  incorporated  "The  Bank  of  the  United  States." 
(This  was  the  second  United  States  Bank).  In  1817  a  branch  of 
the  bank  was  established  in  Baltimore,  Maryland.  On  February  11, 
1818,  the  State  of  Maryland  passed  an  act  imposing  a  tax  "on  all 
Banks,  or  branches  thereof,  in  the  State  of  Maryland,  not  chartered 
by  the  legislature."  No  notes  were  to  be  issued  by  such  banks 
except  on  stamped  paper.  M'Culloch,  the  cashier  of  the  Baltimore 
branch  of  the  United  States  Bank,  issued  certain  notes  without  us- 
ing stamped  paper.  The  State  thereupon  brought  suit  in  the  courts 
of  Maryland  against  M'Culloch,  to  recover  the  taxes  claimed  to  be 
due  under  the  statute  and  the  penalties  for  the  violation  of  the 
statute. 

(The  statute  provided  that  in  case  it  was  violated  certain  penal- 
ties should  be  imposed.)  The  State  court  gave  judgment  against 
M'Culloch,  but  he  claimed  that  the  State  statute  was  unconstitu- 
tional and  appealed  to  the  Supreme  Court  of  the  United  States. 

MR.  CHIEF  JUSTICE  MARSHALL  delivered  the  opinion  of  the  court. 

"1.  The  first  question  made  in  the  cause,  is,  has  Congress  power 
to  incorporate  a  bank?" 

This  government  is  acknowledged  by  all  to  be  one  of  enumerated 
powers.  The  principle,  that  it  can  exercise  only  the  powers  granted 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  51 

to  it,  would  seem  too  apparent  to  have  required  to  be  enforced 
by  all  those  arguments  which  its  enlightened  friends,  while  it  was 
depending  before  the  people,  found  it  necessary  to  urge.  That 
principle  is  now  universally  admitted.  But  the  question  respecting 
the  extent  of  the  powers  actually  granted,  is  perpetually  arising, 
and  will  probably  continue  to  arise,  as  long  as  our  system  shall 
exist. 

In  discussing  these  questions,  the  conflicting  powers  of  the  gen- 
eral and  State  governments  must  be  brought  into  view,  and  the 
supremacy  of  their  respective  laws,  when  they  are  in  opposition, 
must  be  settled. 

If  any  one  proposition  could  command  the  universal  assent  of 
mankind,  we  might  expect  it  would  be  this :  that  the  government 
of  the  Union,  though  limited  in  its  powers,  is  supreme  within  its 
sphere  of  action.  This  would  seem  to  result  necessarily  from  its 
nature.  It  is  the  government  of  all ;  its  powers  are  delegated  by 
all;  it  represents  all,  and  acts  for  all.  Though  any  one  State  may 
be  willing  to  control  its  operations,  no  State  is  willing  to  allow  oth- 
ers to  control  them.  The  nation,  on  those  subjects  on  which  it  can 
act.  must  necessarily  bind  its  component  parts.  But  this  question 
is  not  left  to  mere  reason;  the  people  have,  in  express  terms,  de- 
cided it,  by  saying,  "this  Constitution,  and  the  laws  of  the  United 
States,  which  shall  be  made  in  pursuance  thereof,"  "shall  be  the 
supreme  law  of  the  land,"  and  by  requiring  that  the  members  of 
the  State  legislatures,  and  the  officers  of  the  executive  and  judicial 
departments  of  the  States,  shall  take  the  oath  of  fidelity  to  it. 

The  government  of  the  United  States,  then,  though  limited  in  its 
powers,  is  supreme;  and  its  laws,  when  made  in  pursuance  of  the 
Constitution,  form  the  supreme  law  of  the  land,  "any  thing  in  the 
constitution  or  laws  of  any  State  to  the  contrary  notwithstanding." 

Among  the  enumerated  powers  we  do  not  find  that  of  establish- 
ing a  bank  or  creating  a  corporation.  But  there  is  no  phrase  in  the 
instrument  which,  like  the  articles  of  confederation,  excludes  inci- 
dental or  implied  powers ;  and  which  requires  that  everything  grant- 
ed shall  be  expressly  and  minutely  described.  Even  the  tenth  amend- 
ment, which  was  framed  for  the  purpose  of  quieting  the  excessive 
jealousies  which  had  been  excited,  omits  the  word  "expressly,"  and 
declares  only  that  the  powers  "not  delegated  to  the  United  States, 
nor  prohibited  to  the  States,  are  reserved  to  the  States  or  to  the 
people;"  thus  leaving  the  question,  whether  the  particular  power 
which  may  become  the  subject  of  contest,  has  been  delegated  to  the 
one  government,  or  prohibited  to  the  other,  to  depend  on  a  fair 
construction  of  the  whole  instrument.  *  *  *  * 

Although,  among  the  enumerated  powers  of  government,  we  do 
not  find  the  word  "bank,"  or  "incorporation,"  we  find  the  great 
powers  to  lay  and  collect  taxes ;  to  borrow  money ;  to  regulate  com- 
merce; to  declare  and  conduct  a  war;  and  to  raise  and  support 
armies  and  navies.  The  sword  and  purse,  all  the  external  rela- 
tions, and  no  inconsiderable  portion  of  the  industry  of  the  nation, 


52  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

are  intrusted  to  its  government.  It  can  never  be  pretended  that 
these  vast  powers  draw  after  them  others  of  inferior  importance, 
merely  because  they  are  inferior.  Such  an  idea  can  never  be  ad- 
vanced. But  it  may,  with  great  reason,  be  contended,  that  a  govern- 
ment, intrusted  with  such  ample  powers,  on  the  due  execution  of 
which  the  happiness  and  prosperity  of  the  nation  so  vitally  depends, 
must  also  be  intrusted  with  ample  means  for  their  execution.  The 
power  being  given,  it  is  the  interest  of  the  nation  to  facilitate  its 
execution.  It  can  never  be  their  interest,  and  cannot  be  presumed 
to  have  been  their  intention,  to  clog  and  embarass  its  execution  by 
withholding  the  most  appropriate  means.  Throughout  this  vast 
republic,  from  the  St.  Croix  to  the  Gulf  of  Mexico,  from  the  Atlan- 
tic to  the  Pacific,  revenue  is  to  be  collected  and  expended,  armies 
are  to  be  marched  and  supported.  The  exigencies  of  the  nation  may 
require  that  the  treasure  raised  in  the  North  should  be  transported 
to  the  South,  that  raised  in  the  East  conveyed  to  the  West,  or  that 
this  order  should  be  reversed.  Is  that  construction  of  the  Consti- 
tution to  be  preferred  which  would  render  these  operations  difficult, 
hazardous,  and  expensive?  Can  we  adopt  that  construction,  (un- 
less the  words  imperiously  require  it)  which  would  impute  to  the 
framers  of  that  instrument,  when  granting  these  powers  for  the 
public  good,  the  intention  of  impeding  their  exercise  by  withholding 
a  choice  of  means?  If,  indeed,  such  be  the  mandate  of  the  Consti- 
tution, we  have  only  to  obey;  but  that  instrument  does  not  profess 
to  enumerate  the  means  by  which  the  powers  it  confers  may  be 
executed;  nor  does  it  prohibit  the  creation  of  a  corporation,  if  the 
existence  of  such  a  being  be  essential  to  the  beneficial  exercise  of 
those  powers.  It  is,  then,  the  subject  of  fair  inquiry,  how  far  such 
means  may  be  employed. 

It  is  not  denied  that  the  powers  given  to  the  government  imply 
the  ordinary  means  of  execution.  That,  for  example  of  raising 
revenue,  and  applying  it  to  national  purposes,  is  admitted  to  imply 
the  power  of  conveying  money  from  place  to  place,  as  the  exigencies 
of  the  nation  may  require,  and  of  employing  the  u'sual  means  of 
conveyance.  But  it  is  denied  that  the  government  has  its  choice 
of  means ;  or,  that  it  may  employ  the  most  convenient  means,  if,  to 
employ  them,  it  be  necessary  to  erect  a  corporation. 

On  what  foundation  does  this  argument  rest?  On  this  alone: 
The  power  of  creating  a  corporation,  is  one  appertaining  to  sover- 
eignty, and  is  not  expressly  conferred  on  Congress.  This  is  true. 
But  all  legislative  powers  appertain  to  sovereignty.  The  original 
power  of  giving  the  law  on  any  subject  whatever,  is  a  sovereign 
( power;  and  if  the  government  of  the  Union  is  restrained  from 
creating  a  corporation,  as  a  means  of  performing  its  functions,  on 
the  single  reason  that  the  creation  of  a  corporation  is  an  act  of  sov- 
ereignty; if  the  sufficiency  of  this  reason  be  acknowledged,  there 
would  be  some  difficulty  in  sustaining  the  authority  of  Congress  to 
pass  other  laws  for  the  accomplishment  of  the  same  objects. 

The  government  which  has  a  right  to  do  an  act,  and  has  imposed 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  53 

on  it  the  duty  of  performing  that  act,  must,  according  to  the  dic- 
tates of  reason,  be  allowed  to  select  the  means ;  and  those  who  con- 
tend that  it  may  not  select  any  appropriate  means,  that  one  partic- 
ular mode  of  effecting  the  object  excepted,  take  upon  themselves 
the  burden  of  establishing  that  exception. 

The  creation  of  a  corporation,  it  is  said,  appertains  to  sovereignty. 
This  is  admitted.  But  to  what  portion  of  sovereignty  does  it  ap- 
pertain? Does  it  belong  to  one  more  than  to  another?  In  Ameri- 
ca, the  powers  of  sovereignty  are  divided  between  the  government 
of  the  Union  and  those  of  the  States.  They  are  each  sovereign, 
with  respect  to  the  objects  committed  to  it,  and  neither  sovereign 
with  respect  to  the  objects  committed  to  the  other. 

But  the  Constitution  of  the  United  States  has  not  left  the  right 
of  Congress  to  employ  the  necessary  means,  for  the  execution  of 
the  powers  conferred  on  the  government,  to  general  reasoning.  To 
its  enumeration  of  powers  is  added  that  of  making  "all  laws  which 
shall  be  necessary  and  proper,  for  carrying  into  execution  the  fore- 
going powers,  and  all  other  powers  vested  by  this  Constitution,  in 

the  government  of  the  United  States,  or  in  any  department  there- 
of/' *  *  *  * 

But  the  argument  on  which  most  reliance  is  placed,  is  drawn  from 
the  peculiar  language  of  this  clause.  Congress  is  not  empowered 
by  it  to  make  all  laws  which  may  have  relation  to  the  powers  con- 
ferred on  the  government,  but  such  only  as  may  be  "necessary  and 
proper"  for  carrying  them  into  execution.  The  word  "necessary" 
is  considered  as  controlling  the  whole  sentence,  and  as  limiting  the 
right  to  pass  laws  for  the  execution  of  the  granted  powers,  to  such 
as  are  indispensable,  and  without  which  the  power  would  be  nuga- 
tory. That  it  excludes  the  choice  of  means,  and  leaves  to  Congress, 
in  each  case,  that  only  which  is  most  direct  and  simple. 

Is  it  true  that  this  is  the  sense  in  which  the  word  "necessary"  is 
always  used?  Does  it  always  import  an  absolute  physical  necessity, 
so  strong,  that  one  thing,  to  which  another  may  be  termed  neces- 
sary, cannot  exist  without  that  other?  We  think  it  does  not.  If 
reference  be  had  to  its  use,  in  the  common  affairs  of  the  world,  or 
in  approved  authors,  we  find  that  it  frequently  imports  no  more 
than  that  one  thing  is  convenient,  or  useful,  or  essential  to  anoth- 
er. To  employ  the  means  necessary  to  an  end,  is  generally  under- 
stood as  employing  any  means,  calculated  to  produce  the  end,  and 
not  as  being  confined  to  those  single  means,  without  which  the  end 
would  be  entirely  unattainable.  Such  is  the  character  of  human 
language,  that  no  word  conveys  to  the  mind,  in  all  situations,  one 
single  definite  idea;  and  nothing  is  more  common  than  to  use 
words  in  a  figurative  sense.  Almost  all  compositions  contain  words, 
which,  taken  in  their  rigorous  sense  would  convey  a  meaning  dif- 
ferent from  that  which  is  obviously  intended.  It  is  essential  to  just 
construction,  that  many  words  which  import  something  excessive, 
should  be  understood  in  a  more  mitigated  sense — in  that  sense 
which  common  usage  justifies.  The  word  "necessary"  is  of  this 


54  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

description.  It  has  not  a  fixed  character  peculiar  to  itself.  It  ad- 
mits of  all  degrees  of  comparison;  and  is  often  connected  with 
other  words,  which  increase  or  diminish  the  impression  the  mind 
receives  of  the  urgency  it  imports.  A  thing  may  be  necessary,  very 
necessary,  absolutely  or  indispensably  necessary.  To  no  mind 
would  the  same  idea  be  conveyed,  by  these  several  phrases.  This 
comment  on  the  word  is  well  illustrated,  by  the  passage  cited  at 
the  bar,  from  the  10th  section  of  the  1st  article  of  the  Constitution. 
It  is,  we  think,  impossible  to  compare  the  sentence  which  prohibits 
a  State  from  laying  "imposts,  or  duties  on  imports  or  exports,  ex- 
cept what  may  be  absolutely  necessary  for  executing  its  inspection 
laws,"  with  that  which  authorizes  Congress  "to  make  all  laws  which 
shall  be  necessary  and  proper  for  carrying  into  execution"  the  pow- 
ers cf  the  general  government,  without  feeling  a  conviction  that 
the  convention  understood  itself  to  change  materially  the  meaning 
of  the  word  "necessary,"  by  prefixing  the  word  "absolutely."  This 
word,  then,  like  others,  is  used  in  various  senses;  and,  in  its  con- 
struction, the  subject,  the  context,  the  intention  of  the  person  using 
them,  are  all  to  be  taken  into  view.  *  *  *  * 

This  clause,  as  constructed  by  the  State  of  Maryland,  would 
abridge  and  almost  annihilate  this  useful  and  necessary  right  of 
the  legislature  to  select  its  means.  That  this  could  not  be  intended, 
is,  we  should  think,  had  it  not  been  already  controverted,^  too  ap- 
parent for  controversy.  We  think  so  for  the  following  reasons : — 

1.  The  clause  is  placed  among  the  powers   of   Congress,  not 
among  the  limitations  on  those  powers. 

2.  Its  terms  purport  to  enlarge,  not  to  diminish  the  powers  vested 
in  the  government.     It  purports  to  be  an  additional  power,  not  a 
restriction  on  those  already  granted.     *     *     *     * 

We  admit,  as  all  must  admit,  that  the  powers  of  the  government 
are  limited,  and  that  its  limits  are  not  to  be  transcended.  But  we 
think  the  sound  construction  of  the  Constitution  must  allow  to  the 
national  legislature  that  discretion,  with  respect  to  the  means  by 
which  the  power  it  confers  are  to  be  carried  into  execution,  which 
will  enable  that  body  to  perform  the  high  duties  assigned  to  it,  in 
the  manner  most  beneficial  to  the  people.  Let  the  end  be  legitimate, 
let  it  be  within  the  scope  of  the  Constitution,  and  all  means  which 
are  appropriate,  which  are  plainly  adapted  to  that  end,  which  are 
not  prohibited,  but  consist  with  the  letter  and  spirit  of  the  Consti- 
tution, are  constitutional.  *  *  *  * 

After  the  most  deliberate  consideration,  it  is  the  unanimous  and 
decided  opinion  of  this  Court,  that  the  act  to  incorporate  the  Bank 
of  the  United  States  is  a  law  made  in  pursuance  of  the  Constitu- 
tion, and  is  a  part  of  the  supreme  law  of  the  land. 

It  being  the  opinion  of  the  court  that  the  act  incorporating  the 
bank  is  constitutional ;  and  that  the  power  of  establishing  a  branch 
in  the  State  of  Maryland  might  be  properly  exercised  by  the  bank 
itself,  we  proceed  to  inquire: — 

2.  Whether  the  State  of  Maryland  may,  without  violating  the 
Constitution,  tax  that  branch  ? 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  55 

That  the  power  of  taxation  is  one  of  vital  importance;  that  it  is 
retained  by  the  States;  that  it  is  not  abridged  by  the  grant  of  a 
similar  power  to  the  government  of  the  Union;  that  it  is  to  be 
concurrently  exercised  by  the  two  governments;  are  truths  which 
have  never  been  denied.  But,  such  is  the  paramount  character  of 
the  Constitution,  that  its  capacity  to  withdraw  any  subject  from 
the  action  of  even  this  power,  is  admitted.  The  States  are  express- 
ly forbidden  to  lay  any  duties  on  imports  or  exports,  except  what 
may  be  absolutely  necessary  for  executing  their  inspection  laws. 
If  the  obligation  of  this  prohibition  must  be  conceded — if  it  may 
restrain  a  State  from  the  exercise  of  its  taxing  power  on  imports 
and  exports ;  the  same  paramount  character  would  seem  to  restrain, 
as  it  certainly  may  restrain  a  State  from  such  other  exercise  of 
this  power,  as  is  in  its  nature  incompatible  with,  and  repugnant  to, 
the  constitutional  laws  of  the  Union.  A  law,  absolutely  repugnant 
to  another,  as  entirely  repeals  that  other  as  if  express  terms  of  re- 
peal were  used. 

This  great  principle  is,  that  the  Constitution  and  the  laws  made 
in  pursuance  thereof  are  supreme;  that  they  control  the  Constitu- 
tion and  laws  of  the  respective  States ;  and  cannot  be  controlled  by 
them.  From  this,  which  may  be  almost  termed  an  axiom,  other 
propositions  are  deducted  as  corollaries,  on  the  truth  or  error  of 
which,  and  on  their  application  to  this  case,  the  cause  has  been 
supposed  to  depend.  These  are,  1st,  That  a  power  to  create  im- 
plies a  power  to  preserve.  2d,  That  a  power  to  destroy  if  wielded 
by  a  different  hand  is  hostile  to,  and  imcompatible  with  these  pow- 
ers to  create  and  preserve.  3d,  That  where  this  repugnancy  ex- 
ists, that  authority  which  is  supreme  must  control,  not  yield  to  that 
over  which  it  is  supreme. 

The  power  of  Congress  to  create,  and  of  course  to  continue,  the 
bank,  was  the  subject  of  the  preceding  part  of  this  opinion,  and  is 
no  longer  to  be  considered  questionable. 

That  the  power  of  taxing  it  by  the  States  may  be  exercised  so 
as  to  destroy  it,  is  too  obvious  to  be  denied. 

The  sovereignty  of  a  State  extends  to  everything  which  exists 
by  its  own  authority,  or  is  introduced  by  its  permission;  but  does 
it  extend  to  those  means  which  are  employed  by  Congress  to  car- 
ry into  execution  powers  conferred  on  that  body  by  the  people  of 
the  United  States.  We  think  it  demonstrable  that  it  does  not. 
Those  powers  are  not  given  by  the  people  of  a  single  State.  They 
are  given  by  the  people  of  the  United  States,  to  a  government 
whose  laws,  made  in  pursuance  of  the  Constitution,  are  declared 
to  be  supreme.  Consequently,  the  people  of  a  single  State  cannot 
confer  a  sovereignty  which  will  extend  over  them. 

We  find  then,  on  just  theory,  a  total  failure  of  this  original  right 
to  tax  the  means  employed  by  the  government  of  the  Union,  for 
the  execution  of  its  powers. 

That  the  power  to  tax  involves  the  power  to  destroy;  that  the 
power  to  destroy  may  defeat  and  render  useless  the  power  to  cre- 


P«*urn  to 
BUREAU  OF  INTERNAi"tONA!    RFI  AIlOWS 


56  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

ate;  that  there  is  a  plain  repugnance,  in  conferring  on  one  gov- 
ernment a  power  to  control  the  constitutional  measures  of  another, 
which  other,  with  respect  to  those  very  measures,  is  declared  to 
be  supreme  over  that  which  exerts  the  control,  are  propositions  not 
to  be  denied. 

We  are  unanimously  of  the  opinion,  that  the  law  passed  by  the 
legislature  of  Maryland,  imposing  a  tax  on  the  Bank  of  the  United 
States,  is  unconstitutional  and  void. 


Note. — Congress  has  by  statute  permitted  the  taxation  by  States  of  national 
bank  notes  and  shares  of  stock  in  national  banks  under  certain  prescribed 
conditions,  as  follows : 

Be  it  enacted,  etc.,  That  circulating  notes  of  national  banking  associations 
and  United  States  legal  tender  notes  and  other  notes  and  certificates  of  the 
United  States  payable  on  demand  and  circulating  or  intended  to  circulate  as 
currency  and  gold,  silver  or  other  coin  shall  be  subject  to  taxation  as  money 
on  hand  or  on  deposit  under  the  laws  of  any  State  or  Territory :  Provided, 
That  any  such  taxation  shall  be  exercised  in  the  same  manner  and  at  the 
same  rate  that  any  such  State  or  Territory  shall  tax  money  or  currency  cir- 
culating as  money  within  its  jurisdiction. 

Act  Aug.  13,  1894,  c.  281,  Section  1,  28  Stat.  278. 

Nothing  herein  shall  prevent  all  the  shares  in  any  association  from  being 
included  in  the  valuation  of  the  personal  property  of  the  owner  or  holder 
of  such  shares,  in  assessing  taxes  imposed  by  authority  of  the  State  within 
which  the  association  is  located;  but  the  legislature  of  each  State  may  de- 
termine and  direct  the  manner  and  place  of  taxing  all  the  shares  of  national 
banking  associations  located  within  the  State,  subject  only  to  the  two  re- 
strictions, that  the  taxation  shall  not  be  at  a  greater  rate  than  is  assessed 
upon  other  moneyed  capital  in  the  hands  of  individual  citizens  of  such  State, 
and  that  the  shares  of  any  national  banking  association  owned  by  non-resi- 
dents of  any  State  shall  be  taxed  in  the  city  or  town  where  the  bank  is 
located,  and  not  elsewhere.  Nothing  herein  shall  be  construed  to  exempt 
the  real  property  of  associations  from  either  State,  county,  or  municipal 
taxes,  to  the  same  extent,  according  to  its  value,  as  other  real  property  is 
taxed. 

Act  June  3,  1864,  c.  106,  Section  41,  13  Stat.  III.  Act  Feb.  10,  1868,  c.  7, 
15  Stat.  34. 

Sub-Section  C. 
DIRECT  AND  INDIRECT  TAXES. 

HYLTON  v.  UNITED  STATES. 
3  DALLAS,  171.     1796. 

This  suit  was  originally  brought  in  the  Circuit  Court  for  the  Dis- 
trict of  Virginia,  by  the  United  States  against  one  Daniel  Hylton 
to  recover  the  penalty  imposed  by  Act  of  Congress  of  June  5,  1794, 
for  not  entering  and  paying  the  duty  on  a  number  of  carriages  for 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  57 

the  conveyance  of  persons,  which  he  kept  for  his  own  use.  Hylton 
defended  the  suit  on  the  ground  that  the  tax  was  unconstitutional 
and  void.  The  argument  turned  entirely  upon  the  point  whether 
the  tax  on  carriages  kept  for  private  use  was  a  direct  tax.  If  it 
was  not  a  direct  tax,  it  was  admitted  to  be  rightly  laid,  within 
the  first  clause  of  the  8th  section  of  Article  I  of  the  Constitution, 
which  declares,  "All  duties,  imposts  and  excises  shall  be  uniform 
throughout  the  United  States."  If  it  were  a  direct  tax,  it  was  un- 
constitutional, under  another  clause  of  the  same  section  of  the  Con- 
stitution, which  provides,  "no  capitation  or  other  direct  tax  shall 
be  laid,  unless  in  proportion  to  the  census  or  enumeration  of  the 
inhabitants  of  the  United  States."  The  Circuit  Court  was  divided 
in  its  opinion,  whereupon  Hylton  confessed  judgment  as  a  founda- 
tion for  his  appeal  to  the  Supreme  Court  of  the  United  States. 
The  court  delivered  their  opinions  seriatim. 

The  following  opinion  was  delivered  by  MR.  JUSTICE  CHASE  : 

I  think,  an  annual  tax  on  carriages  for  the  conveyance  of  per- 
sons may  be  considered  as  within  the  power  granted  to  Con- 
gress to  lay  duties.  The  term  duty  is  the  most  comprehensive, 
next  to  the  general  term  tax;  and  practically  in  Great  Britain, 
whence  we  take  our  general  ideas  of  taxes,  duties,  imposts,  excises, 
customs,  etc.,  embraces  taxes  on  stamps,  tolls  for  passage,  etc.,  and 
is  not  confined  to  taxes  on  importation  only.  It  seems  to  me,  that 
a  tax  on  expense  is  an  indirect  tax;  and  I  think,  an  annual  tax  on 
a  carriage  for  the  conveyance  of  persons,  is  of  that  kind;  because 
a  carriage  is  a  consumable  commodity ;  and  such  annual  tax  on  it, 
is  on  the  expense  of  the  owner.  I  am  inclined  to  think,  but  of  this 
I  do  not  give  a  judicial  opinion,  that  the  direct  taxes  contemplated 
by  the  Constitution,  are  only  two,  to  wit,  a  capitation  or  poll  tax, 
simply,  without  regard  to  property,  profession  or  any  other  cir- 
cumstance ;  and  a  tax  on  land.  I  doubt,  whether  a  tax,  by  a  general 
assessment  of  personal  property,  within  the  United  States,  is  in- 
cluded within  the  term  direct  tax. 

I  am  for  affirming  the  judgment  of  the  Circuit  Court. 


POLLOCK  v.  FARMERS'  LOAN  AND  TRUST  COMPANY. 
157  U.  S.,  429;  AND  158  U.  S.,  601.    1895. 

This  suit  was  instituted  by  Pollock  and  other  persons,  stockhold- 
ers in  the  Farmers'  Loan  and  Trust  Company,  to  restrain  the  offi- 
cers and  directors  of  the  company  from  paying  to  the  United 
States  the  taxes  assessed  upon  the  net  profits  of  the  company  and 
the  incomes  of  all  trust  estates  which  the  company  held  as  trus- 
tee, exceeding  $4000.  The  bill  charged  that  the  Act  of  Congress 
of  August  15,  1894,  relating  to  the  collection  of  an  income  tax 
was  unconstitutional  and  void  (1)  because  it  was  a  direct  tax  on 


58  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

real  estate  by  being  imposed  on  rents,  issues  and  profits  of  real 
estate;  also  that  it  was  a  direct  tax  on  personal  property  and  was 
not  apportioned  among  the  several  States  as  required  by  the  Con- 
stitution. (2)  If  not  a  direct  tax,  nevertheless  it  was  unconstitu- 
tional since  it  was  not  uniform  as  required  by  the  Constitution,  as 
incomes  under  $4000  were  exempted  from  taxation,  The  Act  of 
Congress  provided  as  follows :  "There  shall  be  assessed,  levied,  col- 
lected and  paid  annually  upon  the  gains,  profits  and  income  receiv- 
ed in  the  preceding  calendar  year  by  every  citizen  of  the  United 
States,  whether  residing  at  home  or  abroad,  and  every  person  re- 
siding therein,  whether  said  gains,  profits,  or  income  be  derived 
from  any  kind  of  property,  rents,  interest,  dividends  or  salaries,  or 
from  any  profession,  trade,  employment  or  vocation  carried  on  in 
the  United  States,  or  elsewhere,  or  from  any  other  source  what- 
ever, a  tax  of  two  per  centum  on  the  amount  so  derived  over  and 
above  four  thousand  dollars,"  etc. 

It  was  held  that  the  statute  was  unconstitutional  so  far  as  it  lev- 
ied a  tax  on  the  rents  or  income  of  real  estate  (157  U.  S.,  429). 
On  other  questions  involved  in  the  case  the  court  was  unable  to 
decide  because  the  judges  were  equally  divided  in  opinion.  A  sec- 
ond hearing  was  granted  by  the  court,  (158  U.  S.,  601). 

The  opinion  was  delivered  by  CHIEF  JUSTICE  FULLER. 

*  *  *  *  As  heretofore  stated,  the  Constitution  divided  Fed- 
eral taxation  into  two  great  classes,  the  class  of  direct  taxes,  and  the 
class  of  duties,  imposts,  and  excises ;  and  prescribed  two  rules  which 
qualified  the  grant  of  power  as  to  each  class. 

The  power  to  lay  direct  taxes  apportioned  among  the  several 
States  in  proportion  to  their  representation  in  the  popular  branch 
of  Congress,  a  representation  based  on  population  as  ascertained 
by  the  census,  was  plenary  and  absolute;  but  to  lay  direct  taxes 
without  apportionment  was  forbidden.  The  power  to  lay  duties, 
imposts,  and  excises  was  subject  to  the  qualification  that  the  im- 
position must  be  uniform  throughout  the  United  States. 

Our  previous  decision  was  confined  to  the  consideration  of  the 
validity  of  the  tax  on  the  income  from  real  estate,  and  on  the  in- 
come from  municipal  bonds.  The  question  thus  limited  was  whether 
such  taxation  was  direct  or  not,  in  the  meaning  of  the  Consti- 
tution, and  the  court  went  no  farther,  as  to  the  tax  on  the  income 
from  real  estate,  than  to  hold  that  it  fell  within  the  same  class  as 
the  source  whence  the  income  was  derived ;  that  is,  that  a  tax  upon 
the  realty  and  a  tax  upon  the  receipts  therefrom  were  alike  direct; 
while  as  to  the  income  from  municipal  bonds,  that  could  not  be 
taxed  because  of  want  of  power  to  tax  the  source,  and  no  reference 
was  made  to  the  nature  of  the  tax  as  being  direct  or  indirect. 

We  are  now  permitted  to  broaden  the  field  of  inquiry,  and  to 
determine  to  which  of  the  two  great  classes  a  tax  upon  a  person's 
entire  income,  whether  derived  from  rents,  or  products,  or  other- 
wise, of  real  estate,  or  from  bonds,  stocks,  or  other  forms  of  per- 
sonal property,  belongs ;  and  we  are  unable  to  conclude  that  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  59 

enforced  subtraction  from  the  yield  of  all  the  owner's  real  or  per- 
sonal property,  in  the  manner  prescribed,  is  so  different  from  a 
tax  upon  the  property  itself,  that  it  is  not  a  direct,  but  an  indirect 
tax,  in  the  meaning  of  the  Constitution.  *  *  *  * 

We  know  of  no  reason  for  holding  otherwise  than  that  the  words 
"direct  taxes,"  on  the  one  hand,  and  "duties,  imposts  and  excises," 
on  the  other,  were  used  in  the  Constitution  in  their  natural  and 
obvious  sense.  Nor,  in  arriving  at  what  those  terms  embrace,  do 
we  perceive  any  ground  for  enlarging  them  beyond,  or  narrowing 
them  within,  their  natural  and  obvious  import  at  the  time  the  Con- 
stitution was  framed  and  ratified.  *  *  *  * 

The  reasons  for  the  clauses  of  the  Constitution  in  respect  of  di- 
rect taxation  are  not  far  to  seek.  The  States,  respectively,  pos- 
sessed plenary  powers  of  taxation.  They  could  tax  the  property  of 
their  citizens  in  such  manner  and  to  such  extent  as  they  saw  fit; 
they  had  unrestricted  powers  to  impose  duties  or  imposts  on  im- 
ports from  abroad,  and  excises  on  manufactures,  consumable  com- 
modities, or  otherwise.  They  gave  up  the  great  sources  of  revenue 
derived  from  commerce;  they  retained  the  concurrent  power  of 
levying  excises,  and  duties  if  covering  anything  other  than  excises ; 
but  in  respect  of  them  the  range  of  taxation  was  narrowed  by  the 
power  granted  over  interstate  commerce,  and  by  the  danger  of  be- 
ing put  at  disadvantage  in  dealing  with  excises  and  manufactures. 
They  retained  the  power  of  direct  taxation,  and  to  that  they  looked 
as  their  chief  resource;  but  even  in  respect  of  that,  they  granted 
the  concurrent  power,  and  if  the  tax  were  placed  by  both  gov- 
ernments on  the  same  subject,  the  claim  of  the  United  States  had 
preference.  Therefore,  they  did  not  grant  the  power  of  direct  tax- 
ation without  regard  to  their  own  condition  and  resources  as  States ; 
but  they  granted  the  power  of  apportioned  direct  taxation,  a  power 
just  as  efficacious  to  serve  the  needs  of  the  general  government, 
but  securing  to  the  States  the  opportunity  to  pay  the  amount  ap- 
portioned, and  to  recoup  from  their  own  citizens  in  the  most  feasi- 
ble way,  and  in  harmony  with  their  system  of  local  self-govern- 
ment. If,  in  the  changes  of  wealth  and  population  in  particular 
States,  apportionment  produced  inequality,  it  was  an  inequality  stip- 
ulated for,  just  as  the  equal  representation  of  the  States,  however 
small,  in  the  Senate,  was  stipulated  for.  The  Constitution  ordains 
affirmatively  that  each  State  shall  have  two  members  of  that  body, 
and  negatively  that  no  State  shall  by  amendment  be  deprived  of  its 
equal  suffrage  in  the  Senate  without  its  consent.  The  Constitution 
ordains  affirmatively  that  representatives  and  direct  taxes  shall  be 
apportioned  among  the  several  States  according  to  numbers,  and 
negatively  that  no  direct  tax  shall  be  laid  unless  in  proportion  to 
the  enumeration. 

The  founders  anticipated  that  the  expenditures  of  the  States, 
their  counties,  cities,  and  towns,  would  chiefly  be  met  by  direct 
taxation  on  accumulated  property,  while  they  expected  that  those 
of  the  Federal  government  would  be  for  the  most  part  met  by  in- 


60  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

direct  taxes.  And  in  order  that  the  power  of  direct  taxation  by  the 
general  government  should  not  be  exercised,  except  on  necessity; 
and,  when  the  necessity  arose,  should  be  so  exercised  as  to  leave  the 
States  at  liberty  to  discharge  their  respective  obligations,  and  should 
not  be  so  exercised,  unfairly  and  discriminately,  as  to  particular 
States  or  otherwise,  by  a  mere  majority  vote,  possibly  of  those 
whose  constituents  were  intentionally  not  subjected  to  any  part  of 
the  burden,  the  qualified  grant  was  made.  Those  who  made  it  knew 
that  the  power  to  tax  involved  the  power  to  destroy,  and  that,  in 
the  language  of  Chief  Justice  Marshall,  in  McCulloch  v.  Maryland, 
"the  only  security  against  the  abuse  of  this  power  is  found  in  the 
structure  of  the  government  itself.  In  imposing  a  tax,  the  legis- 
lature acts  upon  its  constituents.  This  is,  in  general,  a  sufficient 
security  against  erroneous  and  oppressive  taxation."  4  Wheat. 
428.  And  they  retained  this  security  by  providing  that  direct  tax- 
ation and  representation  in  the  lower  house  of  Congress  should  be 
adjusted  on  the  same  measure. 

Moreover,  whatever  the  reasons  for  the  constitutional  provisions, 
there  they  are,  and  they  appear  to  us  to  speak  in  plain  language. 

It  is  said  that  a  tax  on  the  whole  income  of  property  is  not  a 
direct  'tax  in  the  meaning  of  the  Constitution,  but  a  duty,  and,  as 
a  duty,  leviable  without  apportionment,  whether  direct  or  indirect. 
We  do  not  think  so.  Direct  taxation  was  not  restricted  in  one 
breath,  and  the  restriction  blown  to  the  winds  in  another.  *  *  *  * 

The  Constitution  prohibits  any  direct  tax,  unless  in  proportion  to 
numbers  as  ascertained  by  the  census ;  and,  in  the  light  of  the  cir- 
cumstances to  which  we  have  referred,  it  is  not  an  evasion  of  that 
prohibition  to  hold  that  a  general  unapportioned  tax,  imposed  upon 
all  property  owners  as  a  body  for  or  in  respect  of  their  property, 
is  not  direct,  in  the  meaning  of  the  Constitution,  because  confined  to 
the  income  therefrom. 

Whatever  the  speculative  views  of  political  economists  or  revenue 
reformers  may  be,  can  it  be  properly  held  that  the  Constitution, 
taken  in  its  plain  and  obvious  sense,  and  with  due  regard  to  the 
circumstances  attending  the  formation  of  the  government,  author- 
izes a  general  unapportioned  tax  on  the  products  of  the  farm  and 
the  rents  of  real  estate,  although  imposed  merely  because  of  owner- 
ship and  with  no  possible  means  of  escape  from  payment,  as  be- 
longing to  a  totally  different  class  from  that  which  includes  the 
property  from  whence  the  income  proceeds. 

There  can  be  but  one  answer  unless  the  constitutional  restriction 
is  to  be  treated  as  utterly  illusory  and  futile,  and  the  object  of  its 
f ramers  defeated.  We  find  it  impossible  to  hold  that  a  fundamental 
requisition,  deemed  so  important  as  to  be  enforced  by  two  provis- 
ions, one  affirmative  and  one  negative,  can  be  refined  away  by 
forced  distinctions  between  that  which  gives  value  to  property,  and 
the  property  itself. 

Nor  can  we  perceive  any  ground  why  the  same  reasoning  does 
not  apply  to  capital  in  personalty  held  for  the  purpose  of  income  or 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  61 

ordinarily  yielding  income,  and  to  the  income  therefrom.  All  the 
real  estate  of  the  country,  and  all  its  invested  personal  property,  is 
open  to  direct  operation  of  the  taxing  power  if  an  apportion- 
ment be  made  according  to  the  Constitution.  The  Constitution 
does  not  say  that  no  direct  tax  shall  be  laid  by  apportionment  on 
any  other  property  than  land;  on  the  contrary,  it  forbids  all  unap- 
portioned  direct  taxes;  and  we  know  of  no  warrant  for  excepting 
personal  property  from  the  exercise  of  the  power,  or  any  reason 
why  an  apportioned  direct  tax  cannot  be  laid  and  assessed,  as  Mr. 
Gallatin  said  in  his  report  when  Secretary  of  the  Treasury  in  1812, 
"upon  the  same  objects  of  taxation  on  which  the  direct  taxes  levied 
under  the  authority  of  the  State  are  laid  and  assessed."  *  *  *  * 

The  stress  of  the  argument  is  thrown,  however,  on  the  assertion 
that  an  income  tax  is  not  a  property  tax  at  all ;  that  it  is  not  a  real 
estate  tax,  or  a  crop  tax,  or  a  bond  tax;  that  it  is  an  assessment 
upon  the  taxpayer  or  account  of  his  money-spending  power  as 
shown  by  his  revenue  for  the  year  preceding  the  assessment;  that 
rents  received,  crops  harvested,  interest  collected,  have  lost  all  con- 
nection with  their  origin,  and  although  once  not  taxable,  have  be- 
come transmuted  in  their  new  form  into  taxable  subject-matter;  in 
other  words,  that  income  is  taxable  irrespective  of  the  source  from 
whence  it  is  derived.  *  *  *  * 

We  have  considered  the  act  only  in  respect  of  the  tax  on  income 
derived  from  real  estate,  and  from  invested  personal  property,  and 
have  not  commented  on  so  much  of  it  as  bears  on  gains  or  profits 
from  business,  privileges,  or  employments,  in  view  of  the  instances 
in  which  taxation,  on  business,  privilege,  or  employments  has  as- 
sumed the  guise  of  an  excise  tax  and  been  sustained  as  such. 

Being  of  opinion  that  so  much  of  the  sections  of  this  law  as  lays 
a  tax  on  income  from  real  and  personal  property  is  invalid,  we  are 
brought  to  the  question  of  the  effect  of  that  conclusion  upon  these 
sections  as  a  whole. 

It  is  elementary  that  the  same  statute  may  be  in  part  constitu- 
tional and  in  part  unconstitutional,  and  if  the  parts  are  wholly  inde- 
pendent of  each  other,  that  which  is  constitutional  may  stand,  while 
that  which  is  unconstitutional  will  be  rejected.  And  in  the  case 
before  us  there  is  no  question  as  to  the  validity  of  this  act,  except 
sections  twenty-seven  and  thirty-seven,  inclusive,  which  relate  to  the 
subject  which  has  been  under  discussion;  and  as  to  them  we  think 
the  rule  laid  down  by  Chief  Justice  Shaw  in  Warren  v.  Charles- 
town,  2  Gray,  84,  is  applicable,  that  if  the  different  parts  "are  so 
mutually  connected  with  and  dependent  on  each  other,  as  conditions, 
considerations  or  compensations  for  each  other,  as  to  warrant  a 
belief  that  the  legislature  intended  them  as  a  whole,  and  that,  if  all 
could  not  be  carried  into  effect,  the  legislature  would  not  pass  the 
residue  independently,  and  some  parts  are  unconstitutional,  all  the 
provisions  which  are  thus  dependent,  conditional  or  connected,  must 
fall  with  them." 


62  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

According  to  the  census,  the  true  valuation  of  real  and  personal 
property  in  the  United  States  in  1890  was  $65,037,091,197,  of  which 
real  estate  with  improvements  thereon  made  up  $39,544,544,333. 
Of  course,  from  the  latter  must  be  deducted,  in  applying  these  sec- 
tions, all  unproductive  property  and  all  property  whose  net  yield 
does  not  exceed  four  thousand  dollars ;  but,  even  with  such  deduc- 
tions, it  is  evident  that  the  income  from  realty  formed  a  vital  part 
of  the  scheme  for  taxation  embodied  therein.  If  that  be  stricken 
out,  and  also  the  income  from  all  invested  personal  property,  bonds, 
stock,  investments  of  all  kinds,  it  is  obvious  that  by  far  the  largest 
part  of  the  anticipated  revenue  would  be  eliminated,  and  this  would 
leave  the  burden  of  the  tax  to  be  borne  by  professions,  trades,  em- 
ployments, or  vocations;  and  in  that  way  what  was  intended  as  a 
tax  on  capital  would  remain  in  substance  a  tax  on  occupations  and 
labor.  We  cannot  believe  that  such  was  the  intention  of  Congress. 
We  do  not  mean  to  say  that  an  act  laying  by  apportionment  a  direct 
tax  on  real  estate  and  personal  property,  or  the  income  thereof, 
might  not  also  lay  excise  taxes  on  business,  privileges,  employments, 
and  vocations.  But  this  is  not  such  an  act;  and  the  scheme  must 
be  considered  as  a  whole.  Being  invalid  as  to  the  greater  part,  and 
falling,  as  the  tax  would,  if  any  part  were  held  valid,  in  a  direction 
which  could  not  have  been  contemplated  except  in  connection  with 
the  taxation  considered  as  an  entirety,  we  are  constrained  to  con- 
clude that  sections  twenty-seven  to  thirty-seven,  inclusive,  of  the 
act,  which  became  a  law  without  the  signature  of  the  President  on 
August  28,  1894,  are  wholly  inoperative  and  void. 

Our  conclusons  may,  therefore,  be  summed  up  as  follows : 

First.  We  adhere  to  the  opinion  already  announced,  that,  taxes 
on  real  estate  being  indisputably  direct  taxes,  taxes  on  the  rents  or 
income  of  real  estate  are  equally  direct  taxes. 

Second.  We  are  of  opinion  that  taxes  on  personal  property,  or 
on  the  income  of  personal  property,  are  likewise  direct  taxes. 

Third.  The  tax  imposed  by  sections  twenty-seven  to  thirty-seven, 
inclusive,  of  the  act  of  1894,  so  far  as  it  falls  on  the  income  of  real 
estate  and  of  personal  property,  being  a  direct  tax  within  the  mean- 
ing of  the  Constitution,  and,  therefore,  unconstitutional  and  void 
because  not  apportioned  according  to  representation,  all  those  sec- 
tions, constituting  one  entire  scheme  of  taxation,  are  necessarily 
invalid. 

The  decrees  hereinbefore  entered  in  this  court  will  be  vacated; 
the  decrees  below  will  be  reversed,  and  the  cases  remanded,  with 
instructions  to  grant  the  relief  prayed. 


Note. — On  February  25,  1913,  the  XVI  Amendment,  authorizing  Congress 
to  lay  and  collect  taxes  on  incomes  without  apportionment  was  proclaimed 
in  force,  and  under  the  authority  of  this  Amendment,  on  October  3,  1913, 
Congress  enacted  the  Federal  Income  Tax  Law,  which  will  be  found  analyzed 
in  the  Appendix. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  63 

KNOWLTON  v.  MOORE. 
178  U.  S.,  41.     1900. 

The  Act  of  Congress  of  June  13th,  1898,  known  as  the  War 
Revenue  Act,  imposed  a  tax  on  all  personal  property  passing  by 
will  or  under  the  intestate  laws  of  a  State,  to  lineal  or  collateral 
heirs.  The  rate  of  the  tax  was  graduated  according  to  the  amount 
of  the  legacy  or  interest  and  the  relationship  to  the  decedent  of  the 
party  receiving  the  same.  It  was  further  provided  that  the  tax 
should  be  imposed  only  upon  legacies  or  interests  exceeding  the 
sum  of  ten  thousand  dollars.  One  Edwin  Knowlton  died  in  Brook- 
lyn, N.  Y.,  in  October,  1898,  and  his  will  was  probated  and  the 
executors  duly  qualified.  Moore,  the  Collector  of  Internal  Reve- 
nue, demanded  of  the  executors  a  full  statement  showing  the 
amount  of  the  personal  estate  of  the  deceased,  and  the  legatees  and 
distributees.  The  collector  levied  a  tax  on  the  legacies  and  dis- 
tributive shares,  but  in  fixing  the  rate  considered  the  whole  of  the 
personal  estate  of  the  deceased,  and  not  the  amount  coming  to  each 
individual  legatee  under  the  will.  As  the  personal  estate  which  the 
deceased  (Knowlton)  left  amounted  to  over  two  and  a  half  mil- 
lions of  dollars  and  the  rates  under  the  statute  were  progressive 
from  a  low  rate  on  legacies  amounting  to  $10,000,  to  a  high  rate 
on  those  exceeding  $1,000,000,  this  decision  greatly  increased  the 
aggregate  amount  of  the  taxation.  The  tax  was  assessed  at  $42,- 
084.67.  The  executors  paid  the  tax  under  protest  and  sued  in  the 
Circuit  Court  to  recover  the  amount  paid  on  the  grounds  (1)  That 
the  act  was  unconstitutional;  (2)  That  the  rate  of  the  tax  was  im- 
properly fixed  by  the  assessor.  The  Circuit  Court  dismissed  the 
suit,  whereupon  the  executors  appealed  the  case  to  the  United 
States  Supreme  Court. 

MR.  JUSTICE  WHITE  delivered  the  opinion  of  the  court. 

(The  first  portion  of  the  opinion  is  devoted  to  a  historical  dis- 
cussion of  inheritance  and  legacy  taxes,  or  "death  duties,"  as  they 
are  also  known,  in  England,  France  and  Germany,  and  the  early 
forms  of  such  taxes  in  this  country.  It  explains  that  it  is  to  the 
passage  of  property  by  will  or  by  descent  in  cases  of  intestacy, 
that  taxes  of  this  character  relate,  as  distinguished  from  taxes  on 
property  because  of  its  ownership  and  possession.  Such  taxes  are 
collected  in  France  and  Germany  as  stamp  duties  and  are  regarded 
as  indirect  taxes.  In  England  death  duties  or  succession  taxes  were 
known  since  1694,  and  were  collected  on  real  estate  and  interests 
in  personal  property  passing  at  time  of  death.  In  the  United  States, 
Congress  imposed  a  legacy  tax  as  early  as  1797,  and  again  in  1862 
a  similar  act  was  passed.  In  1864  Congress  enacted  a  law  which 
largely  increased  both  -the  probate  duty  or  tax  on  the  whole  estate 
and  the  legacy  tax  on  each  particular  legacy  or  distributive  share. 
The  same  act  also  added  a  tax  on  real  estate  passing  to  all  except 
certain  descendants.  Finally  the  Act  of  Congress  of  August  27, 
1894,  was  in  part  a  legacy  tax,  though  denominated  an  income 
tax  law.  This  Act  was  never  enforced,  however,  its  provisions 


64  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

being  held  unconstitutional  in  the  case  of  Pollock  v.  Farmers'  Loan 
and  Trust  Company,  157  U.  S.  429.  After  the  foregoing  review  of 
such  taxes,  the  opinion  continues:) 

Thus  looking  over  the  whole  field,  and  considering  death  duties 
in  the  order  in  which  we  have  reviewed  them,  that  is,  in  the  Roman 
and  ancient  law,  in  that  of  modern  France,  Germany  and  other 
continental  countries,  in  England  and  those  of  her  colonies 
where  such  laws  have  been  enacted,  in  the  legislation  of 
the  United  States  and  the  several  States  of  the  Union,  the 
following  appears :  Although  different  modes  of  assessing  such 
duties  prevail,  and  although  they  have  different  accidental  names, 
such  as  probate  duties,  stamp  duties,  taxes  on  the  transaction,  or 
the  act  of  passing  of  an  estate  or  a  succession,  legacy  taxes,  estate 
taxes,  or  privilege  taxes,  nevertheless  tax  laws  of  this  nature  in 
all  countries  rest  in  their  essence  upon  the  principle  that  death  is 
the  generating  source  from  which  the  particular  taxing  power  takes 
its  being,  and  that  it  is  the  power  to  transmit,  or  the  transmission 
from  the  dead  to  the  living,  on  which  such  taxes  are  more  imme- 
diately rested.  *  *  * 

Having  ascertained  the  nature  of  death  duties,  the  first  question 
which  arises  is  this:  Can  the  Congress  of  the  United  States  levy 
a  tax  of  that  character?  The  proposition  that  it  cannot  rests  upon 
the  assumption  that,  since  the  transmission  of  property  by  death 
is  exclusively  subject  to  the  regulating  authority  of  the  several 
States,  therefore,  the  levy  by  Congress  of  a  tax  on  inheritances  or 
legacies,  in  any  form,  is  beyond  the  power  of  Congress,  and  is  an 
interference  by  the  National  Government  with  a  matter  which  falls 
alone  within  the  reach  of  State  legislation.  It  is  to  be  remarked 
that  this  proposition  denies  to  Congress  the  right  to  tax  a  subject- 
matter  which  was  conceded  to  be  within  the  scope  of  its  power 
very  early  in  the  history  of  the  government.  The  Act  of  1797, 
which  ordained  legacy  taxes,  was  adopted  at  a  time  when  the 
founders  of  our  government  and  framers  of  our  Constitution  were 
actively  participating  in  public  affairs,  thus  giving  a  practical  con- 
struction to  the  Constitution  which  they  had  helped  to  establish. 
Even  the  then  members  of  the  Congress  who  had  not  been  dele- 
gates to  the  convention  which  framed  the  Constitution  must  have 
had  a  keen  appreciation  of  the  influences  which  had  shaped  the 
Constitution  and  the  restrictions  which  it  embodied,  since  all  ques- 
tions which  related  to  the  Constitution  and  its  adoption  must  have 
been,  at  that  early  date,  vividly  impressed  on  their  minds.  It 
would,  under  these  conditions,  be  indeed  surprising  if  a  tax  should 
have  been  levied  without  question  upon  objects  deemed  to  be 
beyond  the  grasp  of  Congress  because  exclusively  within  State 
authority.  It  is,  moreover,  worthy  of  remark  that  similar  taxes 
have  at  other  periods  and  for  a  considerable  time  been  enforced ; 
and,  although  their  constitutionality  was  assailed  on  other  grounds 
held  unsound  by  this  court,  the  question  of  the  want  of  authority 
of  Congress  to  levy  a  tax  on  inheritances  and  legacies  was  never 
urged  against  the  acts  in  question.  *  *  * 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW,  65 

(The  opinion  then  deals  with  the  subject  matter  of  the  tax  and 
the  property  in  particular  affected  by  the  Act,  as  follows:) 

On  the  very  threshold,  the  theory  that  the  tax  is  not  on  particular 
legacies  or  distributive  shares  passing  upon  a  death,  but  is  on  the 
whole  amount  of  the  personal  property  of  the  deceased,  is  rebutted 
by  the  heading  which  describes  what  is  taxed,  not  as  the  estates 
of  deceased  persons,  but  as  "legacies  and  distributive  shares  of 
personal  property."  This,  whilst  not  conclusive,  is  proper  to  be 
considered  in  interpreting  the  statute,  when  ambiguity  exists  and 
a  literal  interpretation  will  work  out  wrong  or  injury. 

The  opening  words  of  section  29  may,  for  clearness,  be  thus 
arranged : 

"That  any  person  or  persons  having  in  charge  or  trust,  as  admin- 
istrators, executors  or  trustees,  any  legacies  or  distributive  shares 
arising  from  personal  property  .  .  .  passing,  after  the  passage 
of  this  act,  from  any  person  possessed  of  such  property,  either  by 
will  or  by  the  intestate  laws  of  any  State  or  Territory  .  .  . 
shall  be,  and  hereby  are,  made  subject  to  a  duty  or  tax,  to  be  paid 
to  the  United  States,  as  follows : — that  is  to  say",  etc. 

Thus  collocated,  the  statute  clearly  imposes  the  duty  on  the 
particular  legacies  or  distributive  shares,  and  not  on  the  whole 
personal  estate.  It  does  not  say  that  the  tax  is  levied  on  the 
personal  estate  left  by  the  deceased  person,  but  it  is  imposed  on 
legacies  or  distributive  shares  arising  from  such  property.  This 
is  made  clearer  by  considering  that  in  the  very  same  section  the 
tax  is  described  as  being  upon  any  interest  which  may  have  been 
"transferred  by  deed,  grant,  bargain,  sale,  or  gift,  made  or  intended 
to  take  effect  in  possession  or  enjoyment  after  the  death  of  the 
grantor,  bargainer,  to  any  person  or  persons",  etc.  That  is  to 
say,  whilst  the  law  places  the  duty  on  any  legacy  or  distributive 
share  passing  by  death,  it  puts  a  like  burden  on  gifts  which  may 
have  been  made  in  contemplation  of  death  and  otherwise  than  by 
last  will  and  testament. 

Following  the  paragraph  from  which  the  foregoing  has  been 
quoted  the  statute  makes  five  distinct  classes  or  enumerations 
whereby  the  rate  of  the  tax  is  varied,  that  is,  it  is  made  more  or 
less,  depending  upon  the  relationship,  or  want  of  relationship  of 
the  legatee  or  distributee  to  the  deceased.  But  this  enumeration 
can  only  be  explained  upon  the  hypothesis  that  the  law  intended 
to  impose  a  greater  or  less  tax  upon  a  legatee  or  distributee,  arising 
from  his  degree  of  relationship  or  his  being  a  stranger  in  blood  to 
the  deceased.  Thus  it  cannot  be  doubted  that,  in  assessing  the  tax 
the  position  of  each  separate  legatee  or  distributee  must  be  taken 
into  view  in  order  to  ascertain  the  primary  rate  which  the  statute 
establishes.  (The  court  after  discussion  reaches  the  result  that  the 
amount  of  each  particular  legacy  or  share  and  not  the  entire  per- 
sonal estate  of  a  decedent  is  the  amount  on  which  the  tax  is  im- 
posed, and  so  determines  the  particular  rate  of  the  tax  which  is 
progressive  from  a  low  rate  on  legacies  amounting  to  $10,000 
to  a  high  rate  on  legacies  exceeding  $1,000,000.  Thus  the  mode 


66  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

in  which  the  tax  was  computed  by  the  assessor  upon  the  entire 
bulk  of  the  estate  of  over  two  millions  of  dollars  was  held  to  be 
erroneous  by  this  Court.)  *  *  * 

The  precise  meaning  of  the  law  being  thus  determined,  the  ques- 
tion whether  the  tax  which  it  imposes  is  direct,  and  hence  subject 
to  the  requirement  of  apportionment,  arises  for  consideration.  That 
death  duties,  generally,  have  been  from  the  beginning  in  all  coun- 
tries considered  as  different  from  taxes  levied  on  property,  real 
or  personal,  directly  on  account  of  the  ownership  and  possession 
thereof,  is  demonstrated  by  the  review  which  we  have  previously 
made.  It  has  also  been  established  by  what  we  have  heretofore 
said,  that  such  taxes,  almost  from  the  beginning  of  our  national 
life,  have  been  treated  as  duties,  and  not  as  direct  taxes.  Of  course, 
they  concern  the  passing  of  property  by  death,  for  if  there  was  no 
property  to  transmit,  there  would  be  nothing  upon  which  the  tax 
levied  on  the  occasion  of  death  could  be  computed.  This  legisla- 
tive and  administrative  view  of  such  taxes  has  been  directly  upheld 
by  this  court.  In  Scholey  v.  Rew,  23  Wall,  349,  to  which  we  have 
heretofore  referred,  the  question  presented  was  the  constitutionality 
of  the  provisions  of  the  act  of  1864,  imposing  a  succession  duty 
as  to  real  estate.  The  assertion  was  that  the  duty  was  repugnant 
to  the  Constitution,  because  it  was  a  direct  tax  and  had  not  been 
apportioned.  The  tax  was  decided  to  be  constitutional.  The  court 
said  (p.  346)  : 

''But  it  is  clear  that  the  tax  or  duty  levied  by  the  act  under 
consideration  is  not  a  direct  tax  within  the  meaning  of  either  of 
these  provisions.  Instead  of  that  it  is  plainly  an  excise  tax  or 
duty,  authorized  by  section  8  of  article  1,  which  vests  the  power 
in  Congress  to  lay  and  collect  taxes,  duties,  imposts,  and  excises 
to  pay  the  debts  and  provide  for  the  common  defence  and  general 
welfare."  *  *  * 

Concluding  then  that  the  tax  under  consideration  is  not  direct 
within  the  meaning  of  the  Constitution,  but,  on  the  contrary,  is  a 
duty  or  excise,  we  are  brought  to  consider  the  question  of  uni- 
formity. 

The  contention  is  that  because  the  statute  exempts  legacies  and 
distributive  shares  in  personal  property  below  $10,000,  because  it 
classifies  the  rate  of  tax  according  to  the  relationship  or  absence 
of  the  relationship  of  the  taker  to  the  deceased,  and  provides  for  a 
rate  progressing  by  the  amount  of  the  legacy  or  share,  therefore 
the  tax  is  repugnant  to  that  portion  of  the  first  clause  of  section  8 
of  article  1  of  the  Constitution,  which  provides  that  "duties,  im- 
posts, and  excises  shall  be  uniform  throughout  the  United  States." 

The  argument  to  the  contrary,  whilst  conceding  that  the  tax 
devised  by  the  statute  does  not  fulfil  the  requirement  of  equality 
and  uniformity,  as  those  words  are  construed  when  found  in  state 
constitutions,  asserts  that  it  does  not  thereby  follow  that  the  taxes 
in  question  are  repugnant  to  the  Consitution  of  the  United  States, 
since  the  provision  in  the  Constitution,  that  "duties,  imposts  and 
excises  shall  be  uniform  throughout  the  United  States,"  it  is  in- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  67 

sisted,  has  a  different  meaning  from  the  expression  "equal  and 
uniform,"  found  in  state  constitutions.  In  order  to  decide  these 
respective  contentions  it  becomes  at  the  outset  necessary  to  accur- 
ately define  the  theories  upon  which  they  rest. 

On  the  one  side,  the  proposition  is  that  the  command  that  duties, 
imposts,  and  excises  shall  be  uniform  throughout  the  United  States 
relates  to  the  inherent  and  intrinsic  character  of  the  tax ;  that  it 
contemplates  the  operation  of  the  tax  upon  the  property  of  the  in- 
dividual taxpayer,  and  exacts  that  when  an  impost,  duty,  or  excise 
is  levied,  it  shall  operate  precisely  in  the  same  manner  upon  all 
individuals ;  that  is  to  say,  the  proposition  is  that  "uniform  through- 
out the  United  States"  commands  that  excises,  duties,  and  imposts, 
when  levied,  shall  be  equal  and  uniform  in  their  operation  upon 
persons  and  property  in  the  sense  of  the  meaning  of  the  words 
equal  and  uniform,  as  now  found  in  the  constitutions  of  most 
of  the  states  of  the  Union.  The  contrary  construction  is  this : 
That  the  words  "uniform  throughout  the  United  States"  do  not 
relate  to  the  inherent  character  of  the  tax  as  respects  its  operation 
on  individuals,  but  simply  requires  that  whatever  plan  or  method 
Congress  adopts  for  laying  the  tax  in  question,  the  same  plan  and 
the  same  method  must  be  made  operative  throughout  the  United 
States;  that  is  to  say,  that  wherever  a  subject  is  taxed  anywhere, 
the  same  must  be  taxed  everywhere  throughout  the  United  States, 
and  at  the  same  rate.  The  two  contentions  then  may  be  summarized 
by  saying  that  the  one  asserts  that  the  Constitution  prohibits  the 
levy  of  any  duty,  impost  or  excise  which  is  not  intrinsically  equal 
and  uniform  in  its  operations  upon  indviduals,  and  the  other  that 
the  power  of  Congress  in  levying  the  taxes  in  question  is  by  the 
terms  of  the  Constitution  restrained  only  by  the  requirement  that 
such  taxes  be  geographically  uniform.  *  *  *  * 

Considering  the  text,  it  is  apparent  that  if  the  word  "uniform" 
means  "equal  and  uniform"  in  the  sense  now  asserted  by  the 
opponents  of  the  tax,  the  words  "throughout  the  United  States/' 
are  deprived  of  all  real  significance,  and  sustaining  the  contention 
must  hence  lead  to  a  disregard  of  the  elementary  canon  of  con- 
struction which  requires  that  effect  be  given  to  each  word  of  the 
Constitution.  *  *  *  * 

The  proceedings  of  the  Continental  Congress  also  make  it  clear 
that  the  words  "uniform  throughout  the  United  States"  which  were 
afterwards  inserted  in  the  Constitution  of  the  United  States,  had, 
prior  to  its  adoption,  been  frequently  used,  and  always  with  refer- 
ence purely  to  a  geographical  uniformity  and  as  synonymous  with 
the  expression  "to  operate  generally  throughout  the  United  States." 
The  foregoing  situation  so  thoroughly  permeated  all  the  proceedings 
of  the  Continental  Congress  that  we  might  well  rest  content  with 
their  mere  statement.  We  shall,  however,  make  a  few  references 
on  the  subject. 

Thus  it  is  apparent  that  the  expression  "uniform  throughout  the 
United  States"  was  at  that  time  considered  as  purely  geographical, 
as  being  synonymous  with  the  expression  "general  operation  through- 


68  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

out  the  United  States"  and  that  no  thought  of  restricting  Congress 
to  intrinsic  uniformity  obtained,  since  the  powers  recommended 
were  absolutely  in  conflict  with  such  theory.  *  *  *  * 

In  the  convention  which  framed  the  Constitution  the  same  argu- 
ment was  used  without  success,  and,  as  we  have  seen,  the  only  ground 
upon  which  the  striking  out  of  the  words  "and  equal"  after  the 
word  "uniform,"  in  the  Constitution,  can  be  reasonably  explained, 
is  that  it  was  done  to  prevent  the  implication  that  the  duties,  imposts, 
and  excises  which  were  to  be  uniform  throughout  the  United  States 
were  to  be  placed  upon  rights  equally  existing  in  the  several  states. 
To  now  adopt  the  proposition  relied  on  would  be  virtually,  then,  to 
nullify  the  action  of  the  convention,  and  would  relegate  the  taxing 
power  of  Congress  to  the  impotent  condition  in  which  it  was  dur- 
ing the  confederation. 

Lastly,  it  is  urged  that  the  progressive  rate  feature  of  the  statute 
is  so  repugnant  to  fundamental  principles  of  equality  and  justice  that 
the  law  should  be  held  to 'be  void,  even  although  it  transgresses  no 
express  limitation  in  the  Constitution.  Without  intimating  any 
opinion  as  to  the  existence  of  a  right  in  the  courts  to  exercise  the 
power  which  is  thus  invoked,  it  is  apparent  that  the  argument  as 
to  the  enormity  of  the  tax  is  without  merit.  It  was  disposed  of  in 
Magoun  v.  Illinois  Trust  &  Sav.  Bank,  170  U.  S.  293. 

The  review  which  we  have  made  exhibits  the  fact  that  taxes 
imposed  with  reference  to  the  ability  of  the  person  upon  whom 
the  burden  is  placed  to  bear  the  same  have  been  levied  from  the 
foundation  of  the  government.  So,  also,  some  authoritative  think- 
ers, and  a  number  of  economic  writers,  contend  that  a  progressive 
tax  is  more  just  and  equal  than  a  proportional  one.  In  the  absence 
of  constitutional  limitation,  the  question  whether  it  is  or  is  not  is 
legislative,  and  not  judicial.  The  grave  consequences  which  it  is 
asserted  must  arise  in  the  future  if  the  right  to  levy  a  progressive 
tax  be  recognized  involves  in  its  ultimate  aspect  the  mere  assertion 
that  free  and  representative  government  is  a  failure,  and  that 
the  grossest  abuses  of  power  are  foreshadowed  unless  the  courts 
usurp  a  purely  legislative  function.  If  a  case  should  ever  arise, 
where  an  arbitrary  and  confiscatory  exaction  is  imposed  bearing  the 
guise  of  a  progressive  or  any  other  form  of  tax,  it  will  be  time 
enough  to  consider  whether  the  judicial  power  can  afford  a  remedy 
by  applying  inherent  and  fundamental  principles  for  the  protection 
of  the  individual,  even  though  there  be  no  express  authority  in  the 
Constitution  to  do  so.  That  the  law  which  we  have  construed 
affords  no  ground  for  the  contention  that  the  tax  imposed  is  arbi- 
trary and  confiscatory  is  obvious. 

It  follows  from  the  foregoing  opinion  that  the  court  below  erred 
in  denying  all  relief,  and  that  it  should  have  held  the  plaintiff 
entitled  to  recover  so  much  of  the  tax  as  resulted  from  taxing  lega- 
cies not  exceeding  $10,000,  and  from  increasing  the  tax  rate  with 
reference  to  the  whole  amount  of  the  personal  estate  of  the  de- 
ceased from  which  the  legacies  or  distributive  shares  were  derived. 
For  these  reasons  the  judgment  below  must  be  reversed,  and  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  69 

case  be  remanded,  with  instructions  that  further  proceedings  be  had 
according  to  law  and  in  conformity  with  this  opinion,  and  it  is  so 
ordered. 

Mr.  Justice  Brewer  dissents  from  so  much  of  the  opinion  as 
holds  that  a  progressive  rate  of  tax  can  be  validly  imposed.  In 
other  respects  he  concurs. 

Mr.  Justice  Peckham  took  no  part  in  the  decision. 
Mr.  Justice  Harlan  dissenting: 

While  I  concur  in  the  construction  placed  by  the  court  upon  the 
clause  of  the  Constitution  declaring  that  all  duties,  imposts  and 
excises  shall  be  "uniform  throughout  the  United  States,"  I  dissent 
from  that  part  of  the  opinion  construing  the  29th  and  30th  sections 
of  the  revenue  act.  In  my  judgment,  the  question  whether  the  tax 
presented  by  Congress  shall  or  shall  not  be  imposed  is  to  be 
determined  with  reference  to  the  whole  amount  of  the 
personal  property  out  of  which  legacies  and  distributive  shares 
arise.  If  the  value  of  the  whole  personal  property  held  in  charge 
or  trust  by  an  administrator,  executor,  or  trustee  exceeds  $10,000 
then  every  part  of  it  constituting  a  legacy  or  distributive  share, 
except  the  share  of  a  husband  or  wife,  is  taxed  at  the  progressive 
rate  stated  in  the  act  of  Congress.  I  do  not  think  the  act  can  be 
otherwise  interpreted  without  defeating  the  intent  of  Congress. 

Construed  as  I  have  indicated,  the  act  is  not  liable  to  any  con- 
stitutional objection. 

Mr.  Justice  McKenna  concurs  in  this  dissent. 
Note, — See  also  Veazie  Bank  v.  Fenno,  page  48. 


CORPORATION  TAX  CASES. 
FLINT  v.  STONE  TRACY  COMPANY. 

United  States  Supreme  Court,  March,  1911. 
220  U.  S.,  611. 

Congress  by  the  Act  of  August  5,  1909,  passed  what  is  generally 
known  as  "The  Corporation  Tax  Law."  Under  the  provisions  of 
this  law  an  annual  tax  of  one  per  centum  was  imposed  upon  the 
entire  net  income  over  and  above  five  thousand  dollars  of  every  cor- 
poration engaged  in  business  in  the  United  States  and  its  terri- 
tories. Fifteen  appeals  were  taken  to  the  Supreme  Court  from 
judgments  for  the  taxes  assessed  under  the  Act  in  order  to  test  its 
constitutionality.  The  tax  was  designated  in  the  act  as  a  "special 
excise  tax,"  but  it  was  contended  by  those  appealing  from  the  tax 
that  the  tax  in  question  was  a  direct  tax  and  should  have  been 
apportioned  according  to  population  as  required  by  the  Constitu- 
tion. The  cases  were  first  argued  in  March,  1910,  but  subsequently 


yo  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

were  reargued  in  January,  1911,  and  decided  on  March  13,  1911. 
The  important  section  of  the  act  is  as  follows : 

"SEC.  38.  That  every  corporation,  joint  stock  company  or  asso- 
ciation organized  for  profit  and  having  a  capital  stock  represented 
by  shares,  and  every  insurance  company  now  or  hereafter  organized 
under  the  laws  of  the  United  States  or  of  any  State  or  Territory 
of  the  United  States  or  under  the  Acts  of  Congress  applicable  to 
Alaska  or  the  District  of  Columbia,  or  now  or  hereafter  organized 
under  the  laws  of  any  foreign  country  and  engaged  in  business 
in  any  State  or  Territory  of  the  United  States  or  in  Alaska,  or  in 
the  District  of  Columbia,  shall  be  subject  to  pay  annually  a  special 
excise  tax  with  respect  to  the  carrying  on  or  doing  business  by  such 
corporation,  joint  stock  company  or  association  or  insurance  com- 
pany equivalent  to  one  per  centum  upon  the  entire  net  income  over 
and  above  five  thousand  dollars  received  by  it  from  all  sources  dur- 
ing such  year,  exclusive  of  amounts  received  by  it  as  dividends  upon 
stock  of  other  corporations,  joint  stock  companies  or  associations 
or  insurance  companies  subject  to  the  tax  hereby  imposed;  or  if 
organized  under  the  laws  of  any  foreign  country,  upon  the  amount 
of  net  income  over  and  above  five  thousand  dollars  received  by  it 
from  business  transacted  and  capital  invested  within  the  United 
States  and  its  Territories,  Alaska  and  the  District  of  Columbia, 
during  such  year,  exclusive  of  amounts  so  received  by  it  as  divi- 
dends upon  stock  of  other  corporations,  joint  stock  companies  or 
associations  or  insurance  companies  subject  to  the  tax  hereby  im- 
posed." 

MR.  JUSTICE  DAY  delivered  the  opinion  of  the  court. 

While  the  mere  declaration  contained  in  a  statute  that  it  shall  be 
regarded  as  a  tax  of  a  particular  character  does  not  make  it  such  if 
it  is  apparent  that  it  cannot  be  so  designated  consistently  with  the 
meaning  and  effect  of  the  act,  nevertheless,  the  declaration  of  the 
law-making  power  is  entitled  to  much  weight,  and  in  this  statute 
the  intention  is  expressly  declared  to  impose  a  special  excise  tax 
with  respect  to  the  carrying  on  or  doing  business  by  such  corpora- 
tion, joint  stock  company  or  association,  or  company.  It  is  there- 
fore apparent,  giving  all  the  words  of  the  statute  effect,  that  the 
tax  is  imposed  not  upon  the  franchises  of  the  corporation  irrespec- 
tive of  their  use  in  business,  nor  upon  the  property  of  the  corpora- 
tion, but  upon  the  doing  of  corporate  or  insurance  business,  and 
with  respect  to  the  carrying  on  thereof,  in  a  sum  equivalent  to  one 
per  centum  upon  the  entire  net  income  over  and  above  $5,000 
received  from  all  sources  during  the  year ;  that  is,  when  imposed  in 
this  manner  it  is  a  tax  upon  the  doing  of  business  with  the  ad- 
vantages which  inhere  in  the  peculiarities  of  corporate  or  joint 
stock  organization  of  the  character  described.  As  the  latter  organ- 
izations share  many  benefits  of  corporate  organization  it  may  be 
described  generally  as  a  tax  upon  the  doing  of  business  in  a  cor- 
porate capacity.  In  the  case  of  the  insurance  companies  the  tax 
is  imposed  upon  the  transaction  of  such  business  by  companies 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  71 

organized  under  the  laws  of  the  United  States  or  any  State  or 
Territory,  as  heretofore  stated.  *  *  *  * 

Having  thus  interpreted  the  statute  in  conformity,  as  we  believe, 
with  the  intention  of  Congress  in  passing  it,  we  proceed  to  consider 
whether  as,  thus  construed,  the  statute  is  constitutional. 

The  Pollock  case  was  before  this  court  in  Knowlton  v.  Moore, 
178  U.  S.,  41.  In  that  case  this  court  sustained  an  excise  tax  upon 
the  transmission  of  property  by  inheritance.  It  was  contended 
there,  as  here,  that  the  case  was  ruled  by  the  Pollock  case,  and  of 
that  case  this  court,  speaking  by  the  present  Chief  Justice,  said : 

"Considering  that  the  constitutional  rule  of  apportionment  had  its 
origin  in  the  purpose  to  prevent  taxes  on  persons  solely  because  of 
their  general  ownership  of  property  from  being  levied  by  any  other 
rule  than  that  of  apportionment,  two  things  were  decided  by  the 
court :  First,  that  no  sound  distinction  existed  between  a  tax  levied 
on  a  person  solely  because  of  his  general  ownership  of  real  prop- 
erty, and  the  same  tax  imposed  solely  because  of  his  general  owner- 
ship of  personal  property.  Secondly,  that  the  tax  on  the  income 
derived  from  such  property,  real  or  personal,  was  the  legal  equiva- 
lent of  a  direct  tax  on  the  property  from  which  said  income  was 
derived,  and  hence  must  be  apportioned.  These  conclusions,  how- 
ever, lend  no  support  to  the  contention  that  it  was  decided  that 
duties,  imposts  and  excises,  which  are  not  the  essential  equivalents 
of  a  tax  on  property  generally,  real  or  personal,  solely  because  of 
its  ownership,  must  be  converted  into  direct  taxes,  because  it  is 
conceived  that  it  would  be  demonstrated  by  a  close  analysis  that 
they  could  not  be  shifted  from  the  person  upon  whom  they  first 
fall."  *  *  *  * 

The  act  now  under  consideration  does  not  impose  direct  taxation 
upon  property  solely  because  of  its  ownership,  but  the  tax  is  within 
the  class  which  Congress  is  authorized  to  lay  and  collect  under 
Article  1,  Section  8,  Clause  1  of  the  Constitution,  and  described 
generally  as  taxes,  duties,  imposts  and  excises,  upon  which  the 
limitation  is  that  they  shall  be  uniform  throughout  the  United 
States. 

Within  the  category  of  indirect  taxation,  as  we  shall  have  further 
occasion  to  show,  is  embraced  a  tax  upon  business  done  in  a  cor- 
porate capacity,  which  is  the  subject-matter  of  the  tax  imposed 
in  the  act  under  consideration.  The  Pollock  case  construed  the  tax 
there  levied  as  direct,  because  it  was  imposed  upon  property  simply 
because  of  its  ownership.  In  the  present  case  the  tax  is  not  payable 
unless  there  be  a  carrying  on  or  doing  of  business  in  the  designated 
capacity,  and  this  is  made  the  occasion  for  the  tax,  measured  by 
the  standard  prescribed.  The  difference  between  the  acts  is  not 
merely  nominal,  but  rests  upon  substantial  differences  between  the 
mere  ownership  of  property  and  the  actual  doing  of  business  in  a 
certain  way.  *  *  *  * 

The  tax  under  consideration,  as  we  have  construed  the  statute, 
may  be  described  as  an  excise  upon  the  particular  privilege  of  doing 


72  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

business  in  a  corporate  capacity,  i.  e.,  with  the  advantages  which 
arise  from  corporate  or  quasi-corporate  organization,  or,  when  ap- 
plied to  insurance  companies,  for  doing  the  business  of  such  com- 
panies. *  *  *  * 

If  we  are  correct  in  holding  that  this  is  an  excise  tax,  there  is 
nothing  in  the  Constitution  requiring  such  taxes  to  be  apportioned 
according  to  population.  *  *  *  * 

It  is  urged  that  this  power  can  be  so  exercised  by  Congress  as 
to  practically  destroy  the  right  of  the  States  to  create  corporations, 
and  for  that  reason  it  ought  not  to  be  sustained,  and  reference  is 
made  to  the  declaration  of  Chief  Justice  Marshall  in  McCulloch  v. 
Maryland  that  the  power  to  tax  involves  the  power  to  destroy. 

The  argument,  at  last,  comes  to  this :  That  because  of  possible 
results,  a  power  lawfully  exercised  may  work  disastrously,  there- 
fore the  courts  must  interfere  to  prevent  its  exercise,  because  of 
the  consequences  feared.  No  such  authority  has  ever  been  invested 
in  any  court.  The  remedy  for  such  wrongs,  if  such  in  fact  exist, 
is  in  the  ability  of  the  people  to  choose  their  own  representatives, 
and  not  in  the  exertion  of  unwarranted  powers  by  courts  of 
justice.  *  *  *  * 

We  have  noticed  such  objections  as  are  made  to  the  constitu- 
tionality of  this  law  as  it  is  deemed  necessary  to  consider.  Finding 
the  statute  to  be  within  the  constitutional  power  of  Congress,  it 
follows  that  the  judgments  in  the  several  cases  must  be  affirmed. 

Affirmed. 


Section  2. 

POWER  OF  CONGRESS  OVER  COMMERCE. 

Sub-Section  A. 

EXTENT  OF  THE  FEDERAL  POWER. 
1.     In  General. 

GIBBONS  v.  OGDEN. 
9  WHEATON,  100.     1824. 

One  Aaron  Ogden  filed  a  bill  praying  for  an  injunction  in  the 
Court  of  Chancery  of  New  York  against  Thomas  Gibbons.  The 
bill  set  out  the  several  acts  of  the  legislature  of  that  State  which 
secured  to  Robert  R.  Livingston  and  Robert  Fulton  the  exclusive 
navigation  of  all  the  waters  within  the  jurisdiction  of  the  State, 
with  boats  moved  by  steam  or  fire,  for  a  certain  term  of  years, 
which  had  not  expired  at  the  time  the  suit  was  brought.  The 
statutes  also  authorized  the  court  to  award  an  injunction,  restrain- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  73 

ing  any  person  whatever  from  navigating  those  waters  with  boats 
of  that  description.  Livingston  and  Fulton  had  assigned  to  one 
John  R.  Livingston,  who  in  turn  had  assigned  to  the  complainant, 
Ogden,  the  right  to  navigate  the  waters  between  Elizabethtown 
and  other  places  in  New  Jersey  and  the  City  of  New  York.  Gib- 
bons, the  defendant,  in  violation  of  the  exclusive  privilege  held  by 
Ogden,  was  running  two  steamboats  between  New  York  and  Eliz- 
abethtown. The  injunction  prayed  for  was  granted,  but  Gibbons 
in  his  answer  stated  that  his  boats  were  duly  enrolled  and  licensed 
to  be  employed  in  carrying  on  the  coasting  trade,  under  an  Act 
of  Congress  of  February  18th,  1793,  and  he  insisted  on  his  right  by 
virtue  of  such  license  to  navigate  the  waters  between  the  two  ports. 
An  appeal  from  the  order  granting  the  injunction  was  taken  to  the 
highest  court  of  New  York  State,  which  upheld  the  injunction, 
from  which  decree  the  cause  was  carried  to  the  United  States 
Supreme  Court. 

CHIEF  JUSTICE  MARSHALL  delivered  the  opinion  of  the  court. 

The  appellant  contends  that  this  decree  is  erroneous,  because  the 
laws  which  purport  to  give  the  exclusive  privilege  it  sustains,  are 
repugnant  to  the  Constitution  and  laws  of  the  United  States. 

They  are  said  to  be  repugnant — 

1.  To  that  clause  in  the  Constitution  which  authorizes  Congress 
to  regulate  commerce. 

2.  To  that  which  authorizes  Congress  to  promote  the  progress 
of  science  and  useful  arts. 

The  State  of  New  York  maintains  the  constitutionality  of  these 
laws;  and  their  legislature,  their  council  of  revision,  and  their 
judges,  have  repeatedly  concurred  in  this  opinion.  *  *  *  * 

The  words  are:  "Congress  shall  have  power  to  regulate  com- 
merce with  foreign  nations,  and  among  the  several  States,  and  with 
the  Indian  tribes." 

The  subject  to  be  regulated  is  commerce;  and  our  Constitution 
being,  as  was  aptly  said  at  the  bar,  one  of  enumeration,  and  not  of 
definition,  to  ascertain  the  extent  of  the  power,  it  becomes  neces- 
sary to  settle  the  meaning  of  the  word.  The  counsel  for  the  ap- 
pellee, would  limit  it  to  traffic,  to  buying  and  selling,  or  the  inter- 
change of  commodities,  and  do  not  admit  that  it  comprehends  navi- 
gation. This  would  restrict  a  general  term,  applicable  to  many 
objects,  to  one  of  its  significations.  Commerce,  undoubtedly,  is 
traffic,  but  it  is  something  more,  it  is  intercourse.  It  describes  the 
commercial  intercourse  between  nations,  and  parts  of  nations,  in 
all  its  branches,  and  is  regulated  by  prescribing  rules  for  carrying 
on  that  intercourse.  The  mind  can  scarcely  conceive  a  system  for 
regulating  commerce  between  nations,  which  shall  exclude  all  laws 
concerning  navigation,  which  shall  be  silent  on  the  admission  of  the 
vessels  of  the  one  nation  into  the  ports  of  the  other,  and  be  con- 
fined to  prescribing  rules  for  the  conduct  of  individuals,  in  the 
actual  employment  of  buying  and  selling,  or  of  barter. 


74  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

If  commerce  does  not  include  navigation,  the  government  of  the 
Union  has  no  direct  power  over  that  subject,  and  can  make  no  law 
prescribing  what  shall  constitute  American  vessels,  or  requiring  that 
they  shall  be  navigated  by  American  seamen.  Yet  this  power  has 
been  exercised  from  the  commencement  of  the  government,  has 
been  exercised  with  the  consent  of  all,  and  has  been  understood  by 
all  to  be  a  commercial  regulation.  All  America  understands,  and 
has  uniformly  understood,  the  word  "commerce,"  to  comprehend 
navigation.  It  was  so  understood,  and  must  have  been  so  under- 
stood, when  the  Constitution  was  framed.  The  power  over  com- 
merce, including  navigation,  was  one  of  the  primary  objects  for 
which  the  people  of  America  adopted  their  government,  and  must 
have  been  contemplated  in  forming  it.  The  convention  must  have 
used  the  word  in  that  sense,  because  all  have  understood  it  in  that 
sense ;  and  the  attempt  to  restrict  it  comes  too  late. 

If  the  opinion  that  "commerce,"  as  the  word  is  used  in  the  Con- 
stitution, comprehends  navigation  also,  requires  any  additional  con- 
firmation, that  additional  confirmation  is,  we  think,  furnshed  by 
the  words  of  the  instrument  itself.  *  *  *  * 

The  9th  section  of  the  1st  article  declares  that  "  no  preference 
shall  be  given,  by  any  regulation  of  commerce  or  revenue,  to  the 
ports  of  one  State  over  those  of  another."  This  clatfse  cannot  be 
understood  as  applicable  to  those  laws  only  which  are  passed  for 
the  purposes  of  revenue,  because  it  is  expressly  applied  to  com- 
mercial regulations;  and  the  most  obvious  preference  which  can 
be  given  to  one  port  over  another,  in  regulating  commerce,  relates 
to  navigation.  But  the  subsequent  part  of  the  sentence  is  still  more 
explicit.  It  is,  "nor  shall  vessels  bound  to  or  from  one  State,  be 
obliged  to  enter,  clear,  or  pay  duties,  in  another."  These  words 
have  a  direct  reference  to  navigation. 

The  universally  acknowledged  power  of  the  government  to  im- 
pose embargoes,  must  also  be  considered  as  showing  that  all  Amer- 
ica is  united  in  that  construction  which  comprehends  navigation  in 
the  word  commerce.  *  *  *  * 

The  word  used  in  the  Constitution,  then,  comprehends,  and  has 
been  always  understood  to  comprehend,  navigation,  within  its  mean- 
ing; and  a  power  to  regulate  navigation  is  as  expressly  granted  as  if 
that  term  had  been  added  to  the  word  "commerce." 

To  what  commerce  does  this  power  extend?  The  Constitution 
informs  us,  to  commerce  "with  foreign  nations,  and  among  the 
several  States,  and  with  the  Indian  tribes." 

It  has,  we  believe,  been  universally  admitted  that  these  words 
comprehend  every  species  of  commercial  intercourse  between  the 
United  States  and  foreign  nations.  No  sort  of  trade  can  be  carried 
on  between  this  country  and  any  other,  to  which  this  power  does 
not  extend.  It  has  been  truly  said  that  commerce,  as  the  word  is 
used  in  the  Constitution,  is  a  unit,  every  part  of  which  is  indicated 
by  the  term. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  75 

If  this  be  the  admitted  meaning  of  the  word,  in  its  application  to 
foreign  nations,  it  must  carry  the  same  meaning  throughout  the 
sentence,  and  remain  a  unit,  unless  there  be  some  plain  intelligible 
cause  which  alters  it. 

The  subject  to  which  the  power  is  next  applied,  is  to  commerce 
"among  the  several  States."  The  word  "among"  means  intermin- 
gled with.  A  thing  which  among  others,  is  intermingled  with 
them.  Commerce  among  the  States,  cannot  stop  at  the  external 
boundary  line  of  each  State,  but  may  be  introduced  into  the  in- 
terior. 

It  is  not  intended  to  say  that  these  words  comprehend  that  com- 
merce which  is  completely  internal,  which  is  carried  on  between 
man  and  man  in  a  State,  or  between  different  parts  of  the  same 
State,  and  which  does  not  extend  to  or  affect  other  States.  Such 
a  power  would  be  convenient,  and  is  certainly  unnecessary. 

Comprehensive  as  the  word  "among"  is,  it  may  very  properly  be 
restricted  to  that  commerce  which  concerns  more  States  than  one. 
The  phrase  is  not  one  which  would  probably  have  been  selected  to 
indicate  the  completely  interior  traffic  of  a  State,  because  it  is  not 
an  apt  phrase  for  that  purpose;  and  the  enumeration  of  the  par- 
ticular classes  of  commerce  to  which  the  power  was  to  be  extended, 
would  not  have  been  made,  had  the  intention  been  to  extend  the 
power  to  every  description.  The  enumeration  presupposes  some- 
thing not  enumerated;  and  that  something,  if  we  regard  the  lan- 
guage, or  the  subject  of  the  sentence,  must  be  the  exclusively  internal 
commerce  of  a  State.  The  genius  and  character  of  the  whole  gov- 
ernment seem  to  be,  that  its  action  is  to  be  applied  to  all  the  external 
concerns  of  the  nation,  and  to  those  internal  concerns  which  affect 
the  States  generally;  but  not  to  those  which  are  completely  within 
a  particular  State,  which  do  not  affect  other  States,  and  with 
which  it  is  not  necessary  to  interfere,  for  the  purpose  of  executing 
some  of  the  general  powers  of  the  government.  The  completely 
internal  commerce  of  a  State,  then,  may  be  considered  as  reserved 
for  the  State  itself. 

But,  in  regulating  commerce  with  foreign  nations,  the  power  of 
Congress  does  not  stop  at  the  jurisdictional  lines  of  the  several 
States.  It  would  be  a  very  useless  power,  if  it  could  not  pass  those 
lines.  The  commerce  of  the  United  States  with  foreign  nations,  is 
that  of  the  whole  United  States.  Every  district  has  a  right  to  par- 
ticipate in  it.  The  deep  streams  which  penetrate  our  country  in 
every  direction,  pass  through  the  interior  of  almost  every  State  in 
the  Union,  and  furnish  the  means  of  exercising  this  right.  If  Con- 
gress has  the  power  to  regulate  it,  that  power  must  be  exercised 
whenever  the  subject  exists.  If  it  exists  within  the  States,  if  a 
foreign  voyage  may  commence  or  terminate  at  a  port  within  a  State, 
then  the  power  of  Congress  may  be  exercised  within  a  State. 

This  principle  is,  if  possible,  still  more  clear,  when  applied  to 
commerce  "among  the  several  States."  They  either  join  each  other, 
in  which  case  they  are  separated  by  a  mathematical  line,  or  they  are 


76  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

remote  from  each  other,  in  which  case  other  States  lie  between 
them.  What  is  commerce  "among"  them ;  and  how  is  it  to  be  con- 
ducted? Can  a  trading  expedition  between  two  adjoining  States 
commence  and  terminate  outside  of  each?  And  if  the  trading  in- 
tercourse be  between  two  States  remote  from  each  other,  must  it 
not  commence  in  one,  terminate  in  the  other,  and  probably  pass 
through  a  third?  Commerce  among  the  States  must,  of  necessity, 
be  commerce  with  the  States.  In  the  regulation  of  trade  with  the 
Indian  tribes,  the  action  of  the  law,  especially  when  the  Constitution 
was  made,  was  chiefly  within  a  State.  The  power  of  Congress, 
then,  whatever  it  may  be,  must  be  exercised  within  the  territorial 
jurisdiction1  of  the  several  States.  The  sense  of  the  nation  on  this 
subject,  is  unequivocally  manifested  by  the  provisions  made  in  the 
laws  for  transporting  goods,  by  land,  between  Baltimore  and  Provi- 
dence, between  New  York  and  Philadelphia,  and  between  Phila- 
delphia and  Baltimore. 

We  are  now  arrived  at  the  inquiry — what  is  this  power? 

It  is  the  power  to  regulate ;  that  is,  to  prescribe  the  rule  by  which 
commerce  is  to  be  governed.  This  power,  like  all  others  vested  in 
Congress,  is  complete  in  itself,  may  be  exercised  to  its  utmost  ex- 
tent and  acknowledges  no  limitations  other  than  are  prescribed  in 
the  Constitution.  These  are  expressed  in  plain  terms,  and  do  not 
affect  the  questions  which  arise  in  this  case,  or  which  have  been 
discussed  at  the  bar.  If,  as  has  always  been  understood,  the  sov- 
ereignty of  Congress,  though  limited  to  specified  objects,  is  plenary 
as  to  those  objects,  the  power  over  commerce  with  foreign  nations, 
and  among  the  several  States,  is  vested  in  Congress  as  absolutely 
as  it  would  be  in  a  single  government,  having  in  its  constitution 
the  same  restrictions  on  the  exercise  of  the  power  as  are  found  in 
the  Constitution  of  the  United  States.  The  wisdom  and  the  discre- 
tion of  Congress,  their  identity  with  the  people,  and  the  influence 
which  their  constituents  possess  at  elections,  are,  in  this,  as  in  many 
other  instances,  as  that,  for  example,  of  declaring  war,  the  sole  re- 
straints on  which  they  have  relied,  to  secure  them  from  its  abuse. 
They  are  the  restraints  on  which  the  people  must  often  rely  solely, 
in  all  representative  governments. 

The  power  of  Congress,  then,  comprehends  navigation  within  the 
limits  of  every  State  in  the  Union,  so  far  as  that  navigation  may  be, 
in  any  manner,  connected  with  "commerce  with  foreign  nations,  or 
among  the  several  States,  or  with  the  Indian  tribes."  It  may,  of 
consequence,  pass  the  jurisdictional  line  of  New  York,  and  act  upon 
the  very  waters  to  which  the  prohibition  now  under  consideration 
applies.  *  *  *  * 

Since,  however,  in  exercising  the  power  of  regulating  their  own 
purely  internal  affairs,  whether  of  trading  or  police,  the  States  may 
sometimes  enact  laws,  the  validity  of  which  depends  on  their  inter- 
fering with,  and  being  contrary  to,  an  act  of  Congress  passed  in 
pursuance  of  the  Constitution,  the  court  will  enter  upon  the  in- 
quiry, whether  the  laws  of  New  York,  as  expounded  by  the  highest 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  77 

tribunal  of  that  State,  have,  in  their  application  to  this  case,  come 
into  collision  with  an  act  of  Congress,  and  deprived  a  citizen  of  a 
right  to  which  that  act  entitles  him.  *  *  *  * 

It  has  been  contended  that,  if  a  law  passed  by  a  State,  in  the 
exercise  of  its  acknowledged  sovereignty,  comes  into  conflict  with 
a  law  passed  by  Congress  in  pursuance  of  the  Constitution,  they 
affect  the  subject,  and  each  other,  like  equal  opposing  powers. 

But  the  framers  of  our  Constitution  foresaw  this  state  of  things, 
and  provided  for  it  by  declaring  the  supremacy  not  only  of  itself, 
but  of  the  laws  made  in  pursuance  of  it.  The  nullity  of  any  act, 
inconsistent  with  the  Constitution,  is  produced  by  the  declaration 
that  the  Constitution  is  the  supreme  law.  The  appropriate  appli- 
cation of  that  part  of  the  clause  which  confers  the  same  supremacy 
on  laws  and  treaties,  is  to  such  acts  of  the  State  legislatures  as  do 
not  transcend  their  powers,  but,  though  enacted  in  the  execution 
of  acknowledged  State  powers,  interfere  with,  or  are  contrary  to, 
the  laws  of  Congress,  made  in  pursuance  of  the  Constitution,  or 
some  treaty  made  under  the  authority  of  the  United  States.  In 
every  such  case  the  act  of  Congress,  or  the  treaty,  is  supreme;  and 
the  law  of  the  State,  though  enacted  in  the  exercise  of  powers  not 
controverted,  must  yield  to  it.  *  *  *  * 

As  this  decides  the  cause,  it  is  unnecessary  to  enter  in  an  examina- 
tion of  that  part  of  the  Constitution  which  empowers  Congress  to 
promote  the  progress  of  science  and  the  useful  arts.  *  *  *  * 

Powerful  and  ingenious  minds,  taken  as  postulates  that  the  powers 
expressly  granted  to  the  government  of  the  Union  are  to  be  con- 
tracted by  construction  into  the  narrowest  possible  compass,  and 
that  the  original  powers  of  the  States  are  retained,  if  any  possible 
construction  will  retain  them,  may,  by  a  course  of  well-digested 
but  refined  and  metaphysical  reasoning  founded  on  these  premises, 
explain  away  the  Constitution  of  our  country,  and  leave  it  a  mag- 
nificent structure,  indeed,  to  look  at,  but  totally  unfit  for  use.  They 
may  so  entangle  and  perplex  the  understanding,  as  to  obscure  prin- 
ciples which  were  before  thought  quite  plain,  and  induce  doubts 
where,  if  the  mind  were  to  pursue  its  own  course,  none  would  be 
deceived.  In  such  a  case,  it  is  peculiarly  necessary  to  recur  to 
safe  and  fundamental  principles  to  sustain  those  principles,  and, 
when  sustained,  to  make  them  the  test  of  the  arguments  to  be  ex- 
amined. 

Decree  of  Courts  of  New  York  was  reversed  and  the  bill  of  Ogden 
dismissed. 

PENSACOLA  TELEGRAPH   COMPANY  v.   WESTERN 
UNION  TELEGRAPH  COMPANY. 

96  U.  S.,  1.     1877. 

The  Act  of  Congress  of  July  24,  1866,  provided  that  telegraph 
companies  might  construct  and  operate  telegraph  lines  over  any 


78  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

portion  of  the  public  domain  of  the  United  States  and  over  and 
under  navigable  streams  of  the  United  States.  On  December  11, 
1866,  the  Pensacola  Telegraph  Company  was  chartered  by  the 
Florida  Legislature  and  was  given  an  exclusive  privilege  to  establish 
and  maintain  telegraph  lines  in  certain  counties  of  the  State,  con- 
necting with  lines  from  within  or  without  the  State.  In  1874  the 
Legislature  of  Florida  empowered  the  Pensacola  and  Louisville 
Railroad  Company  to  construct  a  line  of  telegraph  along  its  road 
and  to  sell  its  franchise  to  other  telegraph  companies.  This  grant 
embraced  the  territory  of  the  exclusive  grant  given  to  the  Pensacola 
Company  by  the  State  Act  of  December  11,  1866.  The  Western 
Union  Telegraph  Company,  claiming  under  the  railroad  company, 
began  to  string  their  wires  in  this  exclusive  territory,  and  the  Pensa- 
cola Company  filed  a  bill  in  equity  in  the  Circuit  Court  for  the 
Northern  District  of  Florida,  to  enjoin  the  erection  of  the  defend- 
ant's line.  The  question  raised  was  whether  the  act  of  the  State, 
conferring  the  exclusive  privilege  on  the  plaintiff  was  constitutional. 
It  was  argued  that  it  was  repugnant  to  the  Federal  statute  of  July 
24,  1866. 

The  United  States  Circuit  Court  dismissed  the  plaintiff's  bill, 
whereupon  it  appealed  the  case  to  the  United  States  Supreme  Court. 

MR.  CHIEF  JUSTICE  WAITE  delivered  the  opinion  of  the  court. 

Congress  has  power  "to  regulate  commerce  with  foreign  nations 
and  among  the  several  States"  (Const.  Art.  1,  Sec.  8,  par.  3)  ;  and 
"to  establish  post-offices  and  post-roads"  (id.,  par.  7).  The  Con- 
stitution of  the  United  States  and  the  laws  made  in  pursuance 
thereof  are  the  supreme  law  of  the  land.  Art.  6,  par.  2.  A  law  of 
Congress  made  in  pursuance  of  the  Constitution  suspends  or  over- 
rides all  State  statutes  with  which  it  is  in  conflict. 

Since  the  case  of  Gibbons  v.  Ogden,  9  Wheat.  1,  it  has  never 
been  doubted  that  commercial  intercourse  is  an  element  of  com- 
merce which  comes  within  the  regulating  powers  of  Congress.  Post- 
offices  and  post-roads  are  established  to  facilitate  the  transmission 
of  intelligence.  Both  commerce  and  the  postal  service  are  placed 
within  the  power  of  Congress,  because,  being  national  in  their  op- 
eration, they  should  be  under  the  protecting  care  of  the  national 
government. 

The  powers  thus  granted  are  not  confined  to  the  instrumentalities 
of  commerce,  or  the  postal  service  known  or  in  use  when  the  Con- 
stitution was  adopted,  but  they  keep  pace  with  the  progress  of  the 
country,  and  adapt  themselves  to  the  new  developments  of  time 
and  circumstances.  They  extend  from  the  horse  with  its  rider  to 
the  stage-coach,  from  the  sailing  vessel  to  the  steamboat,  from  the 
coach  and  the  steamboat  to  the  railroad,  and  from  the  railroad  to 
the  telegraph,  as  these  new  agencies  are  successively  brought  into 
use  to  meet  the  demands  of  increasing  population  and  wealth.  They 
were  intended  for  the  government  of  the  business  to  which  they 
relate,  at  all  times  and  under  all  circumstances.  As  they  were  in- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  79 

trusted  to  the  general  government  for  the  good  of  the  nation,  it  is 
not  only  the  right,  but  the  duty  of  Congress  to  see  to  it  that  the 
intercourse  among  the  States  and  the  transmission  of  intelligence 
are  not  obstructed  or  unnecessarily  encumbered  by  State  legislation. 

The  electric  telegraph  marks  an  epoch  in  the  progress  of  time. 
In  a  little  more  than  a  quarter  of  a  century  it  has  changed  the 
habits  of  business,  and  become  one  of  the  necessities  of  commerce. 
It  is  indispensable  as  a  means  of  inter-communication,  but  especially 
is  it  so  in  commercial  transactions.  The  statistics  of  the  business 
before  the  recent  reduction  in  rates  show  that  more  than  eighty 
per  cent,  of  all  the  messages  sent  by  telegraph  related  to  commerce. 
Goods  are  sold  and  money  paid  upon  telegraphic  orders.  Con- 
tracts are  made  by  telegraphic  correspondence,  cargoes  secured,  and 
the  movement  of  ships  directed.  The  telegraphic  announcement 
of  the  markets  abroad  regulate  prices  at  home,  and  a  prudent  mer- 
chant rarely  enters  upon  an  important  transaction  without  using 
the  telegraph  freely  to  secure  information. 

The  government  of  the  United  States,  within  the  scope  of  its 
powers,  operates  upon  every  foot  of  territory  under  its  jurisdiction. 
It  legislates  for  the  whole  nation,  and  is  not  embarrassed  by  State 
lines.  Its  peculiar  duty  is  to  protect  one  part  of  the  country  from 
encroachments  by  another  upon  the  national  rights  which  belong 
to  all. 

The  State  of  Florida  has  attempted  to  confer  upon  a  single  cor- 
poration the  exclusive  right  of  transmitting  intelligence  by  tele- 
graph over  a  certain  portion  of  its  territory.  This  embraces  the 
two  westernmost  counties  of  the  State,  and  extends  from  Alabama 
to  the  Gulf.  No  telegraph  line  can  cross  the  State  from  east  to 
west,  or  from  north  to  south,  within  these  counties,  except  it  passes 
over  this  territory.  Within  it  is  situated  an  important  seaport,  at 
which  business  centres,  and  with  which  those  engaged  in  commer- 
cial pursuits  have  occasion  more  or  less  to  communicate.  The 
United  States  have  there  also  the  necessary  machinery  of  the  na- 
tional government.  They  have  a  navy-yard,  forts,  custom-houses, 
courts,  post-offices,  and  the  appropriate  officers  for  the  enforce- 
ment of  the  laws.  The  legislation  of  Florida,  if  sustained,  excludes 
all  commercial  intercourse  by  telegraph  betweerr  the  citizens  of  the 
other  States  and  those  residing  upon  this  territory,  except  by  the 
employment  of  this  corporation.  The  United  States  cannot  com- 
municate with  their  own  officers  by  telegraph  except  in  the  same 
way.  The  State,  therefore,  clearly  has  attempted  to  regulate  com- 
mercial intercourse  between  its  citizens  and  those  of  other  States, 
and  to  control  the  transmission  of  all  telegraphic  correspondence 
within  its  own  jurisdiction. 

It  is  unnecessary  to  decide  how  far  this  might  have  been  done  if 
Congress  had  not  acted  upon  the  same  subject,  for  it  has  acted. 

The  statute  of  July  24,  1866,  in  effect,  amounts  to  a  prohibition  of 
all  State  monopolies  in  this  particular.  It  substantially  declares,  in 
the  interest  of  commerce  and  the  convenient  transmission  of  intelli- 


8o  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

gence  from  place  to  place  by  the  government  of  the  United  States 
and  its  citizens,  that  the  erection  of  telegraph  lines  shall,  so  far  as 
State  interference  is  concerned,  be  free  to  all  who  will  submit  to  the 
conditions  imposed  by  Congress,  and  that  corporations  organized 
under  the  laws  of  one  State  for  constructing  and  operating  tele- 
graph lines  shall  not  be  excluded  by  another  from  prosecuting 
their  business  within  its  jurisdiction,  if  they  accept  the  terms  pro- 
posed by  the  national  government  for  this  national  privilege.  To 
this  extent,  certainly,  the  statute  is  a  legitimate  regulation  of  com- 
mercial intercourse  among  the  States,  and  is  appropriate  legislation 
to  carry  into  execution  the  powers  of  Congress  over  the  postal 
service.  *  *  *  * 

The  State  law  in  question,  so  far  as  it  confers  exclusive  rights 
upon  the  Pensacola  Company,  is  certainly  in  conflict  with  this  legis- 
lation of  Congress.  To  that  extent  it  is,  therefore,  inoperative  as 
against  a  corporation  of  another  State  entitled  to  the  privileges 
of  the  Act  of  Congress.  Such  being  the  case,  the  charter  of  the 
Pensalcola  Company  does  not  exclude  the  Western  Union  Company 
from  the  occupancy  of  the  right  of  way  of  Pensacola  and  Louis- 
ville Railroad  Company  under  the  arrangement  made  for  that  pur- 
pose. Decree  affirmed. 

UNITED  STATES  v.  OHIO  OIL  COMPANY,  ET  AL. 

234  U.  S.  548.     Decided  June  22nd,  1914. 

"THE  PIPE  LINE  CASES." 

By  the  Act  of  Congress  of  June  29th,  1906,  the  Interstate  Com- 
merce Act  of  1887  was  amended  so  that  the  first  section  reads  in 
part  as  follows:  "That  the  provisions  of  this  act  shall  apply  to 
any  corporation  or  any  person  or  persons  engaged  in  the  transporta- 
tion of  oil  or  other  commodity,  except  water  and  except  natural  or 
artificial  gas,  by  means  of  pipe  lines,  or  partly  by  pipe  lines  and 
partly  by  railroad,  or  partly  by  pipe  lines  and  partly  by  water,  who 
shall  be  considered  and  held  to  be  common  carriers  within  the  mean- 
ing and  purpose  of  this  act."  Thereafter  the  Interstate  Commerce 
Commission  issued  an  order  requiring  the  Ohio  Oil  Company,  the 
Standard  Oil  Company  and  several  other  oil  companies,  being  parties 
in  control  of  pipe  lines,  to  file  with  the  Commission  schedules  of  their 
rates  and  charges  for  the  transportation  of  oil.  The  oil  companies 
thereupon  brought  suit  in  the  commerce  court  to  set  aside  and  annul 
the  order,  and  a  preliminary  injunction  was  issued  by  that  court,  on 
the  broad  ground  that  the  statute  applies  to  every  pipe  line  that 
crosses  a  State  boundary,  and  that  thus  construed  it  is  unconstitu- 
tional. The  United  States  and  the  Interstate  Commerce  Commis- 
sion appealed. 

The  circumstances  under  which  the  amendment  was  passed  are 
as  follows :  The  Standard  Oil  Company,  a  New  Jersey  corporation, 
owned  the  stock  of  the  New  York  Transit  Company,  a  pipe  line  made 
a  common  carrier  by  the  laws  of  New  York,  and  of  the  National 
Transit  Company,  a  Pennsylvania  corporation  of  like  character,  and 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  81 

by  these  it  connected  the  Appalachian  oil  field  with  its  refineries  in 
the  East.  It  owned  nearly  all  the  stock  of  the  Ohio  Oil  Company, 
which  connected  the  Lima-Indiana  field  with  its  system;  and  the 
National  Transit  Company,  controlled  by  it,  owned  nearly  all  the 
stock  of  the  Prairie  Oil  and  Gas  Company,  which  ran  from  the  mid- 
continent  field  in  Oklahoma  and  Kansas  and  the  Caddo  field  in 
Louisiana  to  Indiana,  and  connected  with  the  previously  mentioned 
lines.  It  also  was  largely  interested  in  the  Tide  Water  Pipe  Com- 
pany, Limited,  which  connected  with  the  Appalachian  and  other 
fields  and  pursued  the  methods  of  the  Standard  Oil  Company  about 
to  be  described.  By  the  before-mentioned  and  subordinate  lines  the 
Standard  Oil  Company  had  made  itself  master  of  the  only  prac- 
ticable oil  transportation  between  the  oil  fields  east  of  California 
and  the  Atlantic  Ocean,  and  carried  much  the  greater  part  of  the 
oil  between  those  points. 

Availing  itself  of  its  monopoly  of  the  means  of  transportation, 
the  Standard  Oil  Company  refused,  through  its  subordinates,  to 
carry  any  oil  unless  the  same  was  sold  to  it  or  to  them,  and  through 
them  to  it,  on  terms  more  or  less  dictated  by  itself.  In  this  way 
it  made  itself  master  of  the  fields  without  the  necessity  of  owning 
them,  and  carried  across  half  the  continent  a  great  subject  of  inter- 
national commerce  coming  from  many  owners,  but  by  the  duress  of 
which  the  Standard  Oil  Company  was  master,  carrying  it  all  as  its 
own.  The  main  question  is  whether  the  act  does  and  constitutionally 
can  apply  to  the  several  constituents  that  then  had  been  united  into 
a  single  line. 

The  government  also  brought  separate  suits  against  the  Standard 
Oil  Company,  the  Standard  Oil  Company  of  Louisiana,  the  Prairie 
Oil  and  Gas  Company,  and  the  Uncle  Sam  Oil  Company.  The 
principal  questions  involved  being  the  same  in  all  the  cases,  the  one 
opinion  of  the  court  decided  the  suits  instituted. 

MR.  JUSTICE  HOLMES  delivered  the  opinion  of  the  court : 

Taking  up  first  the  construction  of  the  statute,  we  think  it  plain 
that  it  was  intended  to  reach  the  combination  of  pipe  lines  that  we 
have  described.  The  provisions  of  the  act  are  to  apply  to  any  person 
engaged  in  the  transportation  of  oil  by  means  of  pipe  lines.  The 
words  "who  shall  be  considered  and  held  to  be  common  carriers 
within  the  meaning  and  purpose  of  this  act"  obviously  are  not  in- 
tended to  cut  down  the  generality  of  the  previous  declaration  to  the 
meaning  that  only  those  shall  be  held  common  carriers  within  the 
act  who  were  common  carriers  in  a  technical  sense,  but  an  injunction 
that  those  in  control  of  pipe  lines  and  engaged  in  the  transportation 
of  oil  shall  be  dealt  with  as  such.  If  the  Standard  Oil  Company 
and  its  co-operating  companies  were  not  so  engaged,  no  one  was. 
It  not  only  would  be  a  sacrifice  of  fact  to  form,  but  would  empty 
the  act  if  the  carriage  to  the  seaboard  of  nearly  all  the  oil  east  of 
California  were  held  not  to  be  transportation  within  its  meaning, 
because  by  the  exercise  of  their  power  the  carriers  imposed  as  a 
condition  to  the  carriage  a  sale  to  themselves.  As  applied  to  them, 
while  the  amendment  does  not  compel  them  to  continue  in  operation, 


82  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

it  does  require  them  not  to  continue  except  as  common  carriers. 
That  is  the  plain  meaning,  as  has  been  held  with  regard  to  other 
statutes  similarly  framed.  Atlantic  Coast  Line  R.  Co.  v.  Riverside 
Mills,  219  U.  S.  186.  Its  evident  purpose  was  to  bring  within  its 
scope  pipe  lines  that,  although  not  technically  common  carriers,  yet 
were  carrying  all  oil  offered,  if  only  the  offerers  would  sell  at  their 
price. 

The  only  matter  requiring  much  consideration  is  the  constitutional- 
ity of  the  act.  That  the  transportation  is  commerce  among  the 
States  we  think  clear.  That  conception  cannot  be  made  wholly 
dependent  upon  technical  questions  of  title,  and  the  fact  that  the 
oils  transported  belonged  to  the  owner  of  the  pipe  line  is  not  con- 
clusive against  the  transportation  being  such  commerce.  Rearick  v. 
Pennsylvania,  203  U.  S.  507.  See  Texas  &  N.  O.  R.  Co.  v.  Sabine 
Tram  Co.,  227  U.  S.  111.  The  situation  that  we  have  described 
would  make  it  illusory  to  deny  the  title  of  commerce  to  such  tran- 
sportation, beginning  in  purchase  and  ending  in  sale,  for  the  same 
reasons  that  make  it  transportation  within  the  act. 

The  control  of  Congress  over  commerce  among  the  States  cannot 
be  made  a  means  of  exercising  powers  not  intrusted  to  it  by  the 
Constitution,  but  it  may  require  those  who  are  common  carriers  in 
substance  to  become  so  in  form.  So  far  as  the  statute  contemplates 
future  pipe  lines  and  prescribes  the  conditions  upon  which  they  may 
be  established,  there  can  be  no  doubt  that  it  is  valid.  So  the  objec- 
tion is  narrowed  to  the  fact  that  it  applies  to  lines  already  engaged 
in  transportation.  But,  as  we  already  have  intimated,  those  lines 
that  we  are  considering  are  common  carriers  now  in  everything 
but  form.  They  carry  everybody's  oil  to  a  market,  although  they 
compel  outsiders  to  sell  it  before  taking  it  into  their  pipes.  The 
answer  to  their  objection  is  not  that  they  may  give  up  the  business, 
but  that,  as  applied  to  them,  the  statute  practically  means  no  more 
than  they  must  give  up  requiring  a  sale  to  themselves  before  carry- 
ing the  oil  that  they  now  receive.  The  whole  case  is  that  the  ap- 
pellees, if  they  carry,  must  do  it  in  a  way  that  they  do  not  like. 
There  is  no  taking,  and  it  does  not  become  necessary  to  consider 
how  far  Congress  could  subject  them  to  pecuniary  loss  without  com- 
pensation in  order  to  accomplish  the  end  in  view.  Hoke  v.  United 
States,  227  U.  S.  308;  Lottery  Case  (Champion  v.  Ames),  188  U.  S. 
321. 

These  considerations  seem  to  us  sufficient  to  dispose  of  the  cases 
of  the  Standard  Oil  Company,  the  Ohio  Oil  Company,  the  Prairie 
Oil  and  Gas  Company,  and  the  Tide  Water  Pipe  Company,  Limited. 
The  Standard  Oil  Company  of  Louisiana  was  incorported  since  the 
passage  of  the  amendment,  and  before  the  beginning  of  this  suit, 
to  break  up  the  monopoly  of  the  New  Jersey  Standard  Oil  Com- 
pany. It  buys  a  large  part  of  its  oil  from  the  Prairie  Oil  and  Gas 
Company,  which  buys  it  at  the  wells  in  the  mid-continent  field  and 
transfers  the  title  to  the  Louisiana  Company  in  that  State.  Its  case 
also  is  covered  by  what  we  have  said. 

There  remains  to  be  considered  only  the  Uncle  Sam  Oil  Company. 
This  company  has  a  refinery  in  Kansas  and  oil  wells  in  Oklahoma, 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  83 

with  a  pipe  line  connecting  the  two  which  it  has  used  for  the  sole 
purpose  of  conducting  oil  from  its  own  wells  to  its  own  refinery. 
It  would  be  a  perversion  of  language,  considering  the  sense  in  which 
it  is  used  in  the  statute,  to  say  that  a  man  was  engaged  in  the 
transportation  of  water  whenever  he  pumped  a  pail  of  water  from 
his  well  to  his  house.  So  as  to  oil.  When,  as  in  this  case,  a  com- 
pany is  simply  drawing  oil  from  its  own  wells  across  a  State  line 
to  its  own  refinery,  for  its  own  use,  and  that  is  all,  we  do  not 
regard  it  as  falling  within  the  description  of  the  act,  the  transporta- 
tion being  merely  an  incident  to  use  at  the  end.  In  that  case  the 
decree  will  be  affirmed.  In  the  others  the  decree  will  be  reversed. 

Decree  reversed. 

PENNSYLVANIA  v.  THE  WHEELING  AND  BELMONT 
BRIDGE  COMPANY. 

18  HOWARD,  421.     1855. 

The  State  of  Virginia  empowered  the  Wheeling  and  Belmont 
Bridge  Company  to  build  a  bridge  across  the  Ohio  River  at  Wheel- 
ing. The  bridge  interfered  with  the  passage  of  boats  on  the  river. 
The  State  of  Pennsylvania  filed  a  bill  to  have  the  bridge  removed 
as  a  public  nuisance.  In  May,  1852,  the  Supreme  Court  of  the 
United  States  decreed  that  it  should  be  removed.  Pending  the 
decree  the  bridge  was  destroyed  by  a  storm.  The  bridge  was  being 
rebuilt  as  it  was  originally  despite  the  court's  decree.  On  August 
31,  1852,  subsequent  to  the  decree,  Congress  passed  an  act  authoriz- 
ing the  Bridge  Company  to  have  and  maintain  the  bridge  at  the 
height  to  which  it  had  been  rebuilt,  and  declared  it  to  be  a  post-road 
of  the  United  States.  Pennsylvania  moved  for  a  writ  of  assistance 
to  execute  the  original  decree.  The  argument  for  Pennsylvania 
was  that  this  Act  of  Congress  was  unconstitutional  as  interfering 
with  navigation.  This  case  was  one  of  original  jurisdiction  in  the 
Supreme  Court. 

MR.  JUSTICE  NELSON  delivered  the  opinion  of  the  court. 

The  defendants  rely  upon  this  Act  of  Congress  as  furnishing 
authority  for  the  continuance  of  the  bridge  as  constructed,  and  as 
superseding  the  effect  and  operation  of  the  decree  of  the  court  pre- 
viously rendered,  declaring  it  an  obstruction  to  the  navigation. 

On  the  part  of  the  plaintiff,  it  is  insisted  that  the  act  is  unconsti- 
tutional and  void,  which  raises  the  principal  question  in  the  case. 

In  order  to  a  proper  understanding  of  this  question  it  is  material 
to  recur  to  the  ground  and  principles  upon  which  the  majority  of 
the  court  proceeded  in  rendering  the  decree  now  sought  to  be  en- 
forced. 

The  bridge  had  been  constructed  under  an  act  of  the  legislature 
of  the  State  of  Virginia ;  and  it  was  admitted  that  act  conferred  full 
authority  upon  the  defendants  for  the  erection,  subject  only  to  the 
power  of  Congress  in  the  regulation  of  commerce.  It  was  claimed, 
however,  that  Congress  had  acted  upon  the  subject  and  had  regu- 


84  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

lated  the  navigation  of  the  Ohio  River,  and  had  thereby  secured  to 
the  public,  by  virtue  of  its  authority,  the  free  and  unobstructed  use 
of  the  same;  and  that  the  erection  of  the  bridge,  so  far  as  it  inter- 
fered with  the  enjoyment  of  this  use,  was  inconsistent  with  and  in 
violation  of  the  acts  of  Congress,  and  destructive  of  the  right  de- 
rived under  them;  and  that,  to  the  extent  of  this  interference  with 
the  free  navigation  of  the  river,  the  act  of  the  legislature  of  Vir- 
ginia afforded  no  authority  or  justification.  It  was  in  conflict  with 
the  acts  of  Congress,  which  were  the  paramount  law. 

This  being  the  view  of  the  case  taken  by  a  majority  of  the  court, 
they  found  no  difficulty  in  arriving  at  the  conclusion,  that  the  ob- 
struction of  the  navigation  of  the  river,  by  the  bridge,  was  a  viola- 
tion of  the  right  secured  to  the  public  by  the  Constitution  and  laws 
of  Congress,  nor  in  applying  the  appropriate  remedy  in  behalf  of 
the  plaintiff.  The  ground  and  principles  upon  which  the  court  pro- 
ceeded will  be  found  reported  in  13  How.  518. 

Since,  however,  the  rendition  of  this  decree,  the  acts  of  Congress 
already  referred  to,  have  been  passed,  by  which  the  bridge  is  made  a 
post-road  for  the  passage  of  the  mails  of  the  United  States,  and  the 
defendants  are  authorized  to  have  and  maintain  it  at  its  present  site 
and  elevation,  and  requiring  all  persons  navigating  the  river  to  reg- 
ulate such  navigation  so  as  not  to  interfere  with  it. 

So  far,  therefore,  as  this  bridge  created  an  obstruction  to  the  free 
navigation  of  the  river,  in  view  of  the  previous  acts  of  Congress, 
they  are  to  be  regarded  as  modified  by  this  subsequent  legislation; 
and,  although  it  still  may  be  an  obstruction  in  fact,  it  is  not  so  in  the 
contemplation  of  law.  We  have  already  said,  and  the  principle  is 
undoubted,  that  the  act  of  the  Legislature  of  Virginia  conferred  full 
authority  to  erect  and  maintain  the  bridge,  subject  to  the  exercise 
of  the  power  of  Congress  to  regulate  the  navigation  of  the  river. 
That  body  having  in  the  exercise  of  its  power,  regulated  the  navi- 
gation consistent  with  its  preservation  and  continuation,  the  author- 
ity to  maintain  it  would  seem  to  be  complete.  That  authority  com- 
bines the  concurrent  powers  of  both  governments,  State  and  Fed- 
eral, which,  if  not  sufficient,  certainly  none  can  be  found  in  our 
system  of  government  *  *  *  * 

Upon  the  whole,  without  pursuing  the  examination  further,  our 
conclusion  is,  that,  so  far  as  respects  that  portion  of  the  decree 
which  directs  the  alteration  or  abatement  of  the  bridge,  it  cannot  be 
carried  into  execution  since  the  Act  of  Congress  which  regulates  the 
navigation  of  the  Ohio  River,  consistent  with  the  existence  and  con- 
tinuance of  the  bridge ;  and  that  this  part  of  the  motion  in  behalf  of 
the  plaintiff  must  be  denied.  But  that,  so  far  as  respects  that  por- 
tion of  the  decree  which  directs  the  costs  to  be  paid  by  the  defend- 
ants, the  motion  must  be  granted. 


Note. — On  April  6th,  1914,  in  the  case  of  Kansas  City  Southern  Railway 
Company  v.  Kaw  Valley  Drainage  District  of  Wyandotte,  Kansas,  233  U.  S. 
75,  the  Supreme  Court  ruled  that  a  State  could  not  order  the  removal  of  an 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  85 

interstate  railway  bridge.  The  railway  company  was  the  owner  of  bridges 
across  the  Kansas  River.  It  was  alleged  by  the  State  that  the  bridges  were 
so  low  they  caused  the  river  to  overflow  its  banks  and  flood  a  large  section 
of  Kansas  City,  Kansas.  The  State  ordered  the  elevation  of  the  bridges 
or  their  removal  altogether.  The  company  contended  that  its  railway  tracks 
across  the  bridge  were  used  in  commerce  among  the  States,  and  that  such 
commerce  would  be  cut  off  and  destroyed  by  the  enforcement  of  the  order. 
Wherefore,  the  company  claimed  the  protection  of  the  commerce  clause  of 
the  Constitution.  The  Supreme  Court  of  Kansas  sustained  the  order  of  the 
State.  The  Supreme  Court  of  the  United  States  decided  that  the  removal 
of  the  bridges,  which  formed  necessary  parts  of  lines  of  interstate  commerce, 
could  not  be  ordered  by  a  State  court,  even  in  the  avowed  expectation  that 
such  order  would  lead  to  the  desired  elevation  of  the  bridges,  which  the 
State  could  not  order  directly  without  the  authority  of  the  Secretary  of  War 

2.    The  Meaning  of  Commerce 

McCREADY  v.  VIRGINIA. 
94  U.  S.,  391.     1876. 

One  James  W.  McCready,  a  citizen  of  Maryland,  was  convicted 
and  fined  $500  in  the  Circuit  Court  of  Gloucester  County,  Va.,  for 
planting  oysters  in  Ware  River,  a  stream  in  which  the  tide  ebbs  and 
flows.  The  conviction  was  under  the  provisions  of  a  statute  of  Vir- 
ginia, of  April  18,  1874,  which  was  as  follows : 

"If  any  person  other  than  a  citizen  of  this  State  shall  take  or 
catch  oysters,  or  any  shell  fish  in  any  manner,  or  plant  oysters  in 
the  waters  thereof,  or  in  the  Rivers  Potomac  or  Pocomoke,  he  shall 
forfeit  $500,  and  the  vessel,  tackle  and  appurtenances." 

It  was  contended  that  the  statute  was  in  violation  of  the  clause 
of  the  Constitution  giving  Congress  the  power  to  regulate  com- 
merce. The  Supreme  Court  of  the  State  sustained  the  lower  court, 
whereupon  an  appeal  was  taken  to  the  Supreme  Court  of  the  United 
States. 

MR.  CHIEF  JUSTICE  WAITE  delivered  the  opinion  of  the  court. 

*  *  *  *  Neither  do  we  think  this  case  is  affected  by  the  clause  of 
the  Constitution  which  confers  power  on  Congress  to  regulate  com- 
merce, Art.  1.,  Sec.  8.  There  is  here  no  question  of  transportation 
or  exchange  of  commodities,  but  only  of  cultivation  and  production. 
Commerce  has  nothing  to  do  with  land  while  producing,  but  only 
with  the  product  after  it  has  become  the  subject  of  trade.  Vir- 
ginia, owning  land  under  water  adapted  to  the  propagation  and 
improvement  of  oysters,  has  seen  fit  to  grant  the  exclusive  use  of 
it  for  that  purpose  to  the  citizens  of  the  State.  In  this  way,  the 
people  of  Virginia  may  be  enabled  to  produce  what  the  people  of 
other  States  cannot;  but  that  is  because  they  own  property  which 
the  others  do  not.  Their  productions  do  not  spring  from  commerce, 
but  commerce  to  some  extent  from  them.  Judgment  affirmed. 

Note. — Compare  this  case  with  the  earlier  decision  of  the  Supreme  Court 
in  Corfield  vs.  Coryell,  in  fra/page  310. 


86  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

UNITED  STATES  v.  E.  C.  KNIGHT  COMPANY. 
156  U.  S.,  1.     1895. 

The  American  Sugar  Refining  Co.,  a  New  Jersey  corporation, 
being  in  control  of  a  large  majority  of  the  manufactories  of  refined 
sugar  in  the  United  States,  acquired  through  the  purchase  of  stock 
in  four  Philadelphia  refineries,*  such  control  over  those  manu- 
factories that  it  obtained  thereby  a  practical  monopoly  of  the  refin- 
ing of  sugar  throughout  the  United  States. 

The  United  States  government  filed  a  bill  in  equity  in  the  Circuit 
Court  of  the  United  States  for  the  Eastern  District  of  Pennsylvania 
against  the  American  Sugar  Refining  Company  and  four  other  cor- 
porations, among  which  was  the  E.  C.  Knight  Company,  charging 
that  these  corporations  had  violated  the  Act  of  Congress  of  July  2, 
1890  (Sherman  Anti-Trust  Act),  entitled  "An  act  to  protect  trade 
and  commerce  against  unlawful  restraints  and  monopolies,  which 
provided,  that  every  contract,  combination  in  the  form  of  trust,  or 
otherwise,  or  conspiracy  in  restraint  of  trade  and  commerce  among 
the  several  States  is  illegal,  and  that  persons  who  shall  monopolize 
or  shall  attempt  to  monopolize  or  combine  or  conspire  with  other 
persons  to  monopolize  trade  and  commerce  among  the  several 
States  shall  be  guilty  of  a  misdemeanor."  The  government  asked 
that  the  agreements  for  the  purchase  of  the  capital  stock  of  the 
four  refineries  be  cancelled  and  declared  void,  and  that  the  defend- 
ants be  enjoined  from  carrying  them  out  and  violating  said  act. 
The  Circuit  Court  dismissed  the  bill,  whereupon  an  appeal  was  taken 
to  the  Supreme  Court. 

MR.  CHIEF  JUSTICE  FULLER  delivered  the  opinion  of  the  court. 

By  the  purchase  of  the  stock  of  the  four  Philadelphia  refineries, 
with  shares  of  its  own  stock,  the  American  Sugar  Refining  Com- 
pany acquired  nearly  complete  control  of  the  manufacture  of  re- 
fined sugar  within  the  United  States.  The  bill  charged  that  the 
contracts  under  which  these  purchases  were  made  constituted  com- 
binations in  restraint  of  trade,  and  that  in  entering  into  them  the 
defendants  combined  and  conspired  to  restrain  the  trade  and  com- 
merce in  refined  sugar  among  the  several  States  and  with  foreign 
nations,  contrary  to  the  act  of  Congress  of  July  2,  1890. 

The  relief  sought  was  the  cancellation  of  the  agreements  under 
which  the  stock  was  transferred ;  the  redelivery  of  the  stock  to  the 
parties  respectively;  and  an  injunction  against  the  further  perform- 
ance of  the  agreements  and  further  violations  of  the  act.  As  usual, 
there  was  a  prayer  for  general  relief,  but  only  such  relief  could  be 
afforded  under  that  prayer  as  would  be  agreeable  to  the  case  made 


Note. — The  four  Philadelphia  Refineries  were  the  E.  C.  Knight  Company, 
the  Franklin  Sugar  Company,  the  Spreckels  Sugar  Refining  Company  and 
the  Delaware  Sugar  House. 


SELECTED  CASZS  IN  CONSTITUTION AI  LAW.  87 

by  the  bill  and  consistent  with  that  specifically  prayed.  And  as  to 
the  injunction  asked,  that  relief  was  ancillary  to  and  in  aid  of  the 
primary  equity,  or  ground  of  suit,  and,  if  that  failed,  would  fall 
with  it.  The  ground  here  was  the  existence  of  contracts  to  mon- 
opolize interstate  or  international  trade  or  commerce,  and  to  re- 
strain such  trade  or  commerce,  which,  by  the  provisions  of  the  act, 
could  be  rescinded,  or  operations  thereunder  arrested.  *  *  *  * 

The  fundamental  question  is,  whether  conceding  that  the  exist- 
ence of  a  monopoly  in  manufacture  is  established  by  the  evidence, 
that  monopoly  can  be  directly  suppressed  under  the  act  of  Con- 
gress in  the  mode  attempted  by  this  bill.  *  *  *  * 

The  argument  is  that  the  power  to  control  the  manufacture  of 
refined  sugar  is  a  monopoly  over  a  necessary  of  life,  to  the  enjoy- 
ment of  which  by  a  large  part  of  the  population  of  the  United 
States  interstate  commerce  is  indispensable,  and  that,  therefore,  the 
general  government  in  the  exercise  of  the  power  to  regulate  com- 
merce may  repress  such  monopoly  directly  and  set  aside  the  instru- 
ments which  have  created  it.  But  this  argument  cannot  be  con- 
fined to  the  necessaries  of  life  merely,  and  must  include  all  articles 
of  general  consumption.  Doubtless  the  power  to  control  the  manu- 
facture of  a  given  thing  involves  in  a  certain  sense  the  control  of 
its  disposition,  but  this  is  a  secondary  and  not  the  primary  sense;, 
and  although  the  exercise  of  that  power  may  result  in  bringing  the 
operation  of  commerce  into  play,  it  does  not  control  it,  and  affects 
it  only  incidentally  and  indirectly.  Commerce  succeeds  to  manu- 
facture, and  is  not  a  part  of  it.  The  power  to  regulate  commerce 
is  the  power  to  prescribe  the  rule  by  which  commerce  shall  be  gov- 
erned, and  is  a  power  independent  of  the  power  to  suppress  mon- 
opoly. But  it  may  operate  in  repression  of  monopoly  whenever  that 
comes  within  the  rules  by  which  commerce  is  governed  or  when- 
ever the  transaction  is  itself  a  monopoly  of  commerce.  *  *  *  * 

It  will  be  perceived  how  far-reaching  the  proposition  is  that  the 
power  of  dealing  with  a  monopoly  directly  may  be  exercised  by  the 
general  government  whenever  interstate  or  international  commerce 
may  be  ultimately  affected.  The  regulation  of  commerce  applies  to 
the  subjects  of  commerce,  and  not  to  matters  of  internal  policy. 
Contracts  to  buy,  sell,  or  exchange  goods  to  be  transported  among 
the  several  States,  the  transportation  and  its  instrumentalities,  and 
articles  bought,  sold  or  exchanged  for  the  purpose  of  such  transit 
among  the  States,  or  put  in  the  way  of  transit,  may  be  regulated, 
but  this  is  because  they  form  part  of  interstate  trade  or  commerce. 
The  fact  that  an  article  is  manufactured  for  export  to  another  State 
does  not  of  itself  make  it  an  article  of  interstate  commerce,  and  the 
intent  of  the  manufacturer  does  not  determine  the  time  when  the 
article  or  product  passes  from  the  control  of  the  State  and  belongs 
to  commerce.  This  was  so  ruled  in  Coe  v.  Errol,  116  U.  S.,  517, 
525.  *  *  *  * 

In  Kidd  v.  Pearson,  128  U.  S.,  20,  21,  24,  where  the  ques- 
tion was  discussed  whether  the  right  of  a  State  to  enact  a  statute 


88  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

prohibiting  within  its  limits  the  manufacture  of  intoxicating  liq- 
uors, except  for  certain  purposes,  could  be  overthrown  by  the  fact 
that  the  manufacturer  intended  to  export  the  liquors  when  made, 
it  was  held  that  the  intent  of  the  manufacturer  did  not  determine 
the  time  when  the  article  or  product  passed  from  the  control  of 
the  State  and  belonged  to  commerce,  and  that,  therefore,  the  stat- 
ute, in  omitting  to  except  from  its  operation  the  manufacture  of 
intoxicating  liquors  within  the  limits  of  the  State  for  export,  did 
riot  constitute  an  unauthorized  interference  with  the  right  of  Con- 
gress to  regulate  commerce.  And  Mr.  Justice  Lamar  remarked: 
"No  distinction  is  more  popular  to  the  common  mind,  or  more 
clearly  expressed  in  economic  and  political  literature,  than  that  be- 
tween manufacture  and  commerce.  Manufacture  is  transformation 
— the  fashioning  of  raw  materials  into  a  change  of  form  for  use. 
The  functions  of  commerce  are  different.  The  buying  and  selling 
and  the  transportation  incidental  thereto  constitute  commerce;  and 
the  regulation  of  commerce  in  the  constitutional  sense  embraces  the 
regulation  at  least  of  such  transportation.  *  *  *  *  If  it  be  held 
that  the  term  includes  the  regulation  of  all  such  manufactures  as  are 
intended  to  be  the  subject  of  commercial  transactions  in  the  future, 
it  is  impossible  to  deny  that  it  would  also  include  all  productive 
industries  that  contemplate  the  same  thing.  The  result  would  be 
that  Congress  would  be  invested,  to  the  exclusion  of  the  States, 
with  the  power  to  regulate,  not  only  manufactures,  but  also  agri- 
culture, horticulture,  stock  raising,  domestic  fisheries,  mining — in 
short,  every  branch  of  human  industry.  For  is  there  one  of  them 
that  does  not  contemplate,  more  or  less  clearly,  an  interstate  or  for- 
eign market?  Does  not  the  wheat  grower  of  the  Northwest  or 
the  cotton  planter  of  the  South,  plant,  cultivate,  and  harvest  his 
crop  with  an  eye  on  the  prices  at  Liverpool,  New  York,  and  Chi- 
cago? The  power  being  vested  in  Congress  and  denied  to  the 
States,  it  would  follow  as  an  inevitable  result  that  the  duty  would 
devolve  on  Congress  to  regulate  all  of  these  delicate,  multiform  and 
vital  interests — interests  which  in  their  nature  are  and  must  be  lo- 
cal in  all  the  details  of  their  successful  management.  *  *  *  *  The 
demands  of  such  a  supervision  would  require,  not  uniform  legisla- 
tion generally  applicable  throughout  the  United  States,  but  a  swarm 
of  statutes  only  locally  applicable  and  utterly  inconsistent.  Any 
movement  toward  the  establishment  of  rules  of  production  in  this 
vast  country,  with  its  many  different  climates  and  opportunities, 
could  only  be  at  the  sacrifice  of  the  peculiar  advantages  of  a  large 
part  of  the  localties  in  it,  if  not  of  every  one  of  them.  On  the 
other  hand,  any  movement  toward  the  local,  detailed  and  incon- 
gruous legislation  required  by  such  interpretation  would  be  about 
the  widest  possible  departure  from  the  declared  object  of  the  clause 
in  question.  Nor  this  alone.  Even  in  the  exercise  of  the  power 
contended  for, '  Congress  would  be  confined  to  the  regulation,  not 
of  certain  branches  of  industry,  however  numerous,  but  to  those 
instances  in  each  and  every  branch  where  the  producer  contem- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  89 

plated  an  interstate  market.  These  instances  would  be  almost  in- 
finite, as  we  have  seen;  but  still  there  would  always  remain  the 
possibility,  and  often  it  would  be  the  case,  that  the  producer  con- 
templated a  domestic  market.  In  that  case  the  supervisory  power 
must  be  executed  by  the  State;  and  the  interminable  trouble  would 
be  presented,  that  whether  the  one  power  or  the  other  should  ex- 
ercise the  authority  in  question  would  be  determined,  not  by  any 
general  or  intelligible  rule,  but  by  the  secret  and  changeable  inten- 
tion of  the  producer  in  each  and  every  act  of  production.  A  situa- 
tion more  paralyzing  to  the  State  government,  and  more  provo- 
cative of  conflicts  between  the  general  government  and  the  States, 
and  less  likely  to  have  been  what  the  framers  of  the  Constitution 
intended,  it  would  be  difficult  to  imagine."  And  see  Veazie  v. 
Moor,  14  How.  568,  574.  *  *  *  * 

Contracts,  combinations,  or  conspiracies  to  control  domestic  en- 
terprise in  manufacture,  agriculture,  mining,  production  in  all  its 
forms,  or  to  raise  or  lower  prices  or  wages,  might  unquestionably 
tend  to  restrain  external  as  well  as  domestic  trade,  but  the  restraint 
would  be  an  indirect  result,  however  inevitable  and  whatever  its 
extent,  and  such  result  would  not  necessarily  determine  the  object 
of  the  contract,  combination,  or  conspiracy. 

Again,  all  the  authorities  agree  that  in  order  to  vitiate  a  contract 
or  combination  it  is  not  essential  that  its  result  should  be  a  complete 
monopoly ;  it  is  sufficient  if  it  really  tends  to  that  end  and  to  deprive 
the  public  of  the  advantages  which  flow  from  free  competition. 
Slight  reflection  will  show  that  if  the  national  power  extends  to  all 
contracts  and  combinations  in  manufacture,  agriculture,  mining,  and 
other  productive  industries,  whose  ultimate  result  may  affect  exter- 
nal commerce,  comparatively  little  of  business  operations  and  affairs 
would  be  left  for  State  control. 

It  was  in  the  light  of  well-settled  principles  that  the  act  of  July 
2,  1890,  was  framed.  Congress  did  not  attempt  thereby  to  assert 
the  power  to  deal  with  monopoly  directly  as  such ;  or  to  limit  and 
restrict  the  rights  of  corporations  created  by  the  States  or  the  citi- 
zens of  the  States  in  the  acquisition,  control,  or  disposition  of  prop- 
erty; or  to  regulate  or  prescribe  the  price  or  prices  at  which  such 
property  or  the  products  thereof  should  be  sold;  or  to  make  crim- 
inal the  acts  of  persons  in  the  acquisition  and  control  of  property 
which  the  States  of  their  residence  or  creation  sanctioned  or  per- 
mitted. Aside  from  the  provisions  applicable  where  Congress 
might  exercise  municipal  power,  what  the  law  struck  at  was  com- 
binations, contracts,  and  conspiracies  to  monopolize  trade  and  com- 
merce among  the  several  States  or  with  foreign  nations ;  but  the 
contracts  and  acts  of  the  defendants  related  exclusively  to  the  ac- 
quisition of  the  Philadelphia  refineries  and  the  business  of  sugar 
refining  in  Pennsylvania,  and  bore  no  direct  relation  to  commerce 
between  the  States  or  with  foreign  nations.  The  object  was  man- 
ifestly private  gain  in  the  manufacture  of  the  commodity,  but  not 
through  the  control  of  interstate  or  foreign  commerce.  It  is  true 


90  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

that  the  bill  alleged  that  the  products  of  these  refineries  were  sold 
and  distributed  among  the  several  States,  and  that  all  the  compa- 
nies were  engaged  in  trade  or  commerce  with  the  several  States 
and  with  foreign  nations;  but  this  was  no  more  than  to  say  that 
trade  and  commerce  served  manufacture  to  fulfil  its  function.  Su- 
gar was  refined  for  sale,  and  sales  were  probably  made  at  Phila- 
delphia for  consumption,  and  undoubtedly  for  resale  by  the  first 
purchasers  throughout  Pennsylvania  and  other  States,  and  refined 
sugar  was  also  forwarded  by  the  companies  to  other  States  for  sale. 
Nevertheless  it  does  not  follow  that  an  attempt  to  monopolize,  or 
the  actual  monopoly  of,  the  manufacture  was  an  attempt,  whether 
executory  or  consummated,  to  monopolize  commerce,  even  though, 
in  order  to  dispose  of  the  product,  the  instrumentality  of  commerce 
was  necessarily  invoked.  There  was  nothing  in  the  proofs  to  in- 
dicate any  intention  to  put  a  restraint  upon  trade  or  commerce,  and 
the  fact,  as  we  have  seen,  that  trade  or  commerce  might  be  indi- 
rectly affected  was  not  enough  to  entitle  complainants  to  a  decree. 
The  subject-matter  of  the  sale  was  shares  of  manufacturing  stock, 
and  the  relief  sought  was  the  surrender  of  property  which  had  al- 
ready passed  and  the  suppression  of  the  alleged  monopoly  in  man- 
ufacture by  the  restoration  of  the  status  quo  before  the  transfers; 
yet  the  act  of  Congress  only  authorized  the  Circuit  Courts  to  pro- 
ceed by  way  of  preventing  and  restraining  violations  of  the  act  in 
respect  of  contracts,  combinations,  or  conspiracies  in  restraint  of 
interstate  or  international  trade  or  commerce. 

The  Circuit  Court  declined,  upon  the  pleadings  and  proofs,  to 
grant  the  relief  prayed,  and  dismissed  the  bill,  and  we  are  of  opin- 
ion that  the  Circuit  Court  of  Appeals  did  not  err  in  affirming  that 
decree.  Decree  affirmed. 


PAUL  v.  VIRGINIA. 
8  WALLACE,  168.     1868. 

A  statute  of  Virginia  enacted  that  insurance  companies  of  other 
States,  must  before  issuing  policies  in  Virginia,  take  out  a  license 
and  deposit  with  the  State  Treasurer  bonds  to  a  large  amount. 
One  Samuel  B.  Paul,  the  agent  of  several  New  York  companies, 
was  convicted  of  issuing  policies  of  insurance  in  the  State  without 
having  complied  with  this  statute.  He  appealed  from  the  decision  of 
the  highest  State  court  sustaining  his  conviction  to  the  Supreme 
Court  of  the  United  States. 

Paul  claimed  among  other  things  that  the  Virginia  statute,  so 
far  as  his  transactions  were  concerned,  was  unconstitutional  as  a 
regulation  of  interstate  commerce. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  91 

MR.  JUSTICE  FIELD  delivered  the  opinion  of  the  court. 

"It  is  undoubtedly  true.  .  .that  the  power  conferred  upon  Con- 
gress to  regulate  commerce,  includes  as  well  commerce  carried  on 
by  corporations  as  commerce  carried  on  by  individuals." 

There  is,  therefore,  nothing  in  the  fact  that  the  insurance  com- 
panies of  New  York  are  corporations,  to  impair  the  force  of  the 
argument  of  counsel.  The  defect  of  the  argument  lies  in  the  char- 
acter of  their  business.  Issuing  a  policy  of  insurance  is  not  a  trans- 
action of  commerce.  The  policies  are  simple  contracts  of  indem- 
nity against  loss  by  fire,  entered  into  between  the  corporations  and 
the  assured,  for  a  consideration  paid  by  the  latter.  These  con- 
tracts are  not  articles  of  commerce  in  any  proper  meaning  of  the 
word.  They  are  not  subjects  of  trade  and  barter  offered  in  the 
market  as  something  having  an  existence  and  value  independent  of 
the  parties  to  them.  They  are  not  commodities  to  be  shipped  or 
forwarded  from  one  State  to  another,  and  then  put  up  for  sale. 
They  are  like  personal  contracts  between  parties  which  are  com- 
pleted by  their  signature  and  the  transfer  of  consideration:  Such 
contracts  are  not  interstate  transactions,  though  the  parties  may  be 
domiciled  in  different  States.  The  policies  do  not  take  effect — 
are  not  executed  contracts — until  delivered  by  the  agent  in  Vir- 
ginia. They  are,  then,  local  transactions,  and  are  governed  by  the 
local  law.  They  do  not  constitute  a  part  of  the  commerce  between 
States  any  more  than  a  contract  for  the  purchase  and  sale  of  goods 
in  Virginia  by  a  citizen  of  New  York  whilst  in  Virginia  would 
constitute  a  portion  of  such  commerce.  *  *  *  * 

We  perceive  nothing  in  the  statute  of  Virginia  which  conflicts 
with  the  Constitution  of  the  United  States;  and  the  judgment  of 
the  Supreme  Court  of  Appeals  of  that  State  must,  therefore,  be 

Affirmed. 


CHAMPION  v.  AMES. 
188  U.  S.,  321.    1902. 

The  Act  of  Congress  of  March  2,  1895,  prohibited  the  carriage  of 
lottery  tickets  in  the  United  States  mails  or  in  interstate  commerce, 
and  made  it  a  punishable  offense  to  introduce  such  tickets  in 
the  mails  or  in  interstate  commerce.  Charles  F.  Champion 
violated  the  act  by  shipping  a  box  containing  two  lottery  tickets 
via  the  Wells-Fargo  Express  Company,  from  Dallas,  Texas,  to 
Fresno,  California,  for  which  offense  he  was  indicted  under  the  act 
and  taken  into  custody  by  United  States  Marshal  John  C.  Ames. 
Thereupon  he  sued  out  a  writ  of  habeas  corpus  in  the  Circuit  Court 
for  the  Northern  District  of  Illinois,  upon  the  ground  that  the  act 
of  1895,  under  which  it  was  proposed  to  try  him  was  void,  under  the 
Constitution  of  the  United  States,  as  the  carrying  of  lottery  tickets 


v?"-|irn   tO 

RIIRFAI!  OF  INTFRNATiONAI    PFI  ATIHMQ 


92  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

did  not  constitute  "commerce"  among  the  States.  The  Circuit  Court 
denied  him  the  writ  of  habeas  corpus,  whereupon  he  appealed  the 
case  to  the  Supreme  Court  of  the  United  States. 

MR.  JUSTICE  HARLAN  delivered  the  opinion  of  the  majority  of 
the  court. 

"It  was  said  in  argument  that  lottery  tickets  are  not  of  any  real 
or  substantial  value  in  themselves,  and  therefore  are  not  subjects 
of  commerce.  If  that  were  conceded  to  be  the  only  legal  test  as  to 
what  are  to  be  deemed  subjects  of  commerce  that  may  be  regulated 
by  Congress,  we  cannot  accept  as  accurate  the  broad  statement  that 
such  tickets  are  of  no  value.  Upon  their  face  they  showed  that 
the  lottery  company  offered  a  large  capital  prize,  to  be  paid  to  the 
holder  of  the  ticket  winning  the  prize  at  the  drawing  advertised  to 
be  held  at  Asuncion,  Paraguay.  Money  was  placed  on  deposit  in 
different  banks  in  the  United  States  to  be  applied  by  the  agents 
representing  the  lottery  company  to  the  prompt  payment  of  prizes. 
These  tickets  were  the  subject  of  traffic;  they  could  have  been  sold; 
and  the  holder  was  assured  that  the  company  would  pay  to  him  the 
amount  of  the  prize  drawn.  That  the  holder  might  not  have  been 
able  to  enforce  his  claim  in  the  courts  of  any  country  making  the 
drawing  of  lotteries  illegal,  and  forbidding  the  circulation  of  lot- 
tery tickets,  did  not  change  the  fact  that  the  tickets  issued  by  the 
foreign  country  represented  so  much  money  payable  to  the  per- 
son holding  them  and  who  might  draw  the  prizes  affixed  to  them. 
Even  if  the  holder  did  not  draw  a  prize,  the  tickets,  before  the 
drawing,  had  a  money  value  in  the  market  among  those  who  chose 
to  sell  or  buy  lottery  tickets.  *  *  *  *  We  are  of  the  opinion  that 
lottery  tickets  are  subjects  of  traffic,  and  therefore  are  subjects  of 
commerce,  and  the  regulation  of  the  carriage  of  such  tickets  from 
State  to  State,  at  least  by  independent  carriers,  is  a  regulation  of 
commerce  among  the  several  States.  *  *  *  *  That  under  its  power 
to  regulate  commerce  among  the  several  States  Congress — subject  to 
the  limitations  imposed  by  the  Constitution  on  the  exercise  of  the 
powers  granted — has  plenary  authority  over  such  commerce,  and 
may  prohibit  the  carriage  of  such  tickets  from  State  to  State;  and 
that  legislation  to  that  end,  and  of  that  character  is  not  inconsistent 
with  any  limitation  or  restriction  imposed  upon  the  exercise  of  the 
powers  granted  to  Congress. 

The  judgment  of  the  Circuit  Court  quashing  the  writ  of  habeas 
corpus  must  be.  Affirmed. 

3.     When  Commerce  is  Interstate  or  Foreign. 

COE  v.  ERROL. 
116  U.  S.,  517.     1885. 

Edward  S.  Coe  was  the  owner  of  certain  logs  which  had  been 
cut  in  New  Hampshire  and  were  deposited  on  the  banks  of  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  93 

Androscoggin  River  in  the  town  of  Errol,  New  Hampshire,  to  be 
floated  down  stream  into  Maine  when  a  convenient  opportunity 
should  arrive.  The  Androscoggin  River  starts  in  Maine,  but,  after 
running  a  distance  through  that  State,  crosses  the  line  and  runs  a 
distance  through  the  State  of  New  Hampshire,  and  then  back  into 
the  State  of  Maine.  Coe  owned  certain  other  logs  which  had  been 
cut  in  Maine  and  were  being  floated  down  this  stream  in  New 
Hampshire  to  Lewiston,  Maine,  but  were  detained  on  account  of 
low  water  at  Errol.  The  town  officials  of  Errol  assessed  a  certain 
tax  on  all  these  logs  while  they  thus  remained  in  the  town.  Coe 
filed  a  petition  in  the  State  court  to  have  the  tax  abated.  The 
State  court  abated  the  tax  as  far  as  it  affected  the  logs  which  had 
floated  down  the  stream  from  Maine  and  were  on  their  way  to 
Lewiston.  Coe  appealed  the  case  to  the  United  States  Supreme 
Court  on  the  ground  that  the  tax  was  an  interference  with  inter- 
state commerce. 

MR.  JUSTICE  BRADLEY  delivered  the  opinion  of  the  court. 

Are  the  products  of  a  State  though  intended  for  exportation  to 
another  State,  and  partially  prepared  for  that  purpose  by  being  de- 
posited at  a  place  or  port  of  shipment  within  the  State,  liable  to  be 
taxed  like  other  property  within  the  State? 

Does  the  owner's  state  of  mind  in  relation  to  the  goods,  that  is, 
his  intent  to  export  them,  and  his  partial  preparation  to  do  so, 
exempt  them  from  taxation?  This  is  the  precise  question  for  solu- 
tion. 

This  question  does  not  present  the  predicament  of  goods  in  course 
of  transportation  through  a  State,  though  detained  for  a  time  by 
low  water  or  other  causes  of  delay,  as  was  the  case  with  the  logs 
cut  in  the  State  of  Maine,  the  tax  on  which  was  abated  by  the  Su- 
preme Court  of  New  Hampshire.  Such  goods  are  already  in  the 
course  of  commercial  transportation,  and  are  clearly  under  the  pro- 
tection of  the  Constitution.  And  so,  we  think,  would  the  goods 
in  question  be  when  actually  started  in  the  course  of  transportation 
to  another  State,  or  delivered  to  a  carrier  for  such  transportation. 
There  must  be  a  point  of  time  when  they  cease  to  be  governed  ex- 
clusively by  the  domestic  law  and  begin  to  be  governed  and  pro- 
tected by  the  national  law  of  commercial  regulation,  and  that  mo- 
ment seems  to  us  to  be  a  legitimate  one  for  this  purpose,  in  which 
they  commence  their  final  movement  for  transportation  from  the 
State  of  their  origin  to  that  of  their  destination.  When  the  prod- 
ucts of  the  farm  or  the  forest  are  collected  and  brought  in  from 
the  surrounding  country  to  a  town  or  station  serving  as  an  entre- 
pot for  that  particular  region,  whether  on  a  river  or  a  line  of  rail- 
road, such  products  are  not  yet  exports,  nor  are  they  in  process  of 
exportation,  nor  is  exportation  begun  until  they  are  committed  to 
the  common  carrier  for  transportation  out  of  the  State  to  the  State 
of  their  destination,  or  have  started  on  their  ultimate  passage  to 
that  State.  Until  then  it  is  reasonable  to  regard  them  as  not  only 


94  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

within  the  State  of  their  origin,  subject  to  its  jurisdiction,  and  lia- 
ble to  taxation  there,  if  not  taxed  by  reason  of  their  being  intended 
for  exportation,  but  taxed  without  discrimination,  in  the  usual  way 
and  manner  in  which  such  property  is  taxed  in  the  State.  *  *  *  *. 

The  application  of  these  principles  to  the  present  case  is  obvi- 
ous. The  logs  which  were  taxed,  and  the  tax  on  which  was  not 
abated  by  the  Supreme  Court  of  New  Hampshire,  had  not,  when 
so  taxed,  been  shipped  or  started  on  their  final  voyage  or  journey 
to  the  State  of  Maine.  They  had  only  been  drawn  down  from 
Wentworth's  location  to  Errol,  the  place  from  which  they  were  to 
be  transported  to  Lewiston  in  the  State  of  Maine.  There  they 
were  to  remain  until  it  should  be  convenient  to  send  them  to  their 
destination.  They  come  precisely  within  the  character  of  property 
which,  according  to  the  principles  herein  laid  down,  is  taxable. 

The  judgment  of  the  Supreme  Court  of  New  Hampshire  is 

Affirmed. 


THE  DANIEL  BALL. 
10  WALLACE,  557.     1870. 

An  Act  of  Congress  of  July  7,  1838,  provided  that  the  owner, 
master  or  captain  of  any  vessel  propelled  by  steam  transporting 
merchandise  or  passengers  upon  "the  bays,  lakes,  rivers  or  other 
navigable  waters  of  the  United  States"  must  obtain  a  license.  A 
penalty  was  imposed  for  a  failure  to  observe  the  statute.  A  later 
statute  of  August  30,  1852,  provided  for  the  inspection  of  such 
vessels.  In  March,  1868,  the  Daniel  Ball,  a  vessel  propelled  by 
steam,  was  engaged  in  navigating  the  Grand  River  in  the  State  of 
Michigan  between  the  cities  of  Grand  Rapids  and  Grand  Haven, 
both  of  which  were  in  the  State  of  Michigan,  and  in  the  transporta- 
tion of  merchandise  and  passengers  between  those  places,  without 
having  been  licensed  or  inspected  under  the  laws  of  the  United 
States.  An  action  was  brought  by  the  United  States  in  the  District 
Court  for  the  Western  District  of  Michigan  to  recover  the  penalty 
provided  for  failure  to  obtain  such  inspection  and  license.  The 
government  contended  that  the  Grand  River  was  a  navigable  water 
of  the  United  States,  and  in  addition  that  the  steamer  transported 
merchandise  destined  for  ports  and  places  outside  the  State  of 
Michigan,  and  was  thus  engaged  in  commerce  between  the  States. 
The  owners  of  the  vessel  defended  on  the  ground  that  the  Grand 
River  was  not  a  navigable  river,  that  the  steamer  was  engaged 
solely  in  domestic  commerce,  and  that  she  was  not  subject  to  the 
navigation  laws  of  the  United  States. 

The  District  Court  dismissed  the  action.  The  Circuit  Court  re- 
versed this  decision,  and  gave  a  decree  for  the  penalty  demanded. 
From  this  decree  the  ca^e  was  brought  by  appeal  to  the  Supreme 
Court  of  the  United  States. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  95 

MR.  JUSTICE  FIELD  delivered  the  opinion  of  the  court : 

Two  questions  are  presented  in  this  case  for  our  determination. 

First.  Whether  the  steamer  was  at  the  time  designated  in  the 
libel  engaged  in  transporting  merchandise  and  passengers  on  a  nav- 
igable water  of  the  United  States  within  the  meaning  of  the  acts 
of  Congress;  and, 

Second.  Whether  those  acts  are  applicable  to  a  steamer  engaged 
as  a  common  carrier  between  places  in  the  same  State,  when  a  por- 
tion of  the  merchandise  transported  by  her  is  destined  to  places  in 
other  States,  or  comes  from  places  without  the  State,  she  not  run- 
ning in  connection  with  or  in  continuation  of  any  line  of  steamers 
or  other  vessels,  or  any  railway  line  leading  to  or  from  another 
State. 

Upon  the  first  of  these  questions  we  entertain  no  doubt.  The 
doctrine  of  the  common  law  as  to  the  navigability  of  waters  has  no 
application  in  this  country.  Here  the  ebb  and  flow  of  the  tide  do 
not  constitute  the  usual  test,  as  in  England,  or  any  test  at  all  of  the 
navigability  of  waters.  There  no  waters  are  navigable  in  fact,  or 
at  least  to  any  considerable  extent,  which  are  not  subject  to  the  tide, 
and  from  this  circumstance  tide  water  and  navigable  water  there 
signify  substantially  the  same  thing.  But  in  this  country  the  case 
is  widely  different.  Some  of  our  rivers  are  as  navigable  for  many 
hundreds  of  miles  above  as  they  are  below  the  limits  of  tide  water, 
and  some  of  them  are  navigable  for  great  distances  by  large  vessels, 
which  are  not  even  affected  by  the  tide  at  any  point  during  their 
entire  length.  A  different  test  must,  therefore,  be  applied  to  de- 
termine the  navigability  of  our  rivers,  and  that  is  found  in  their 
navigable  capacity.  Those  rivers  must  be  regarded  as  public  nav- 
igable rivers  in  law  which  are  navigable  in  fact.  And  they  are  nav- 
igable in  fact  when  they  are  used,  or  are  susceptible  of  being  used, 
in  their  ordinary  condition,  as  highways  for  commerce,  over  which 
trade  and  travel  are  or  may  be  conducted  in  the  customary  modes 
of  trade  and  travel  on  water.  And  they  constitute  navigable 
waters  of  the  United  States  within  the  meaning  of  the  acts  of 
Congress,  in  contradistinction  from  the  navigable  waters  of  the 
States,  when  they  form  in  their  ordinary  condition  by  themselves, 
or  by  uniting  with  other  waters,  a  continued  highway  over  which 
commerce  is  or  may  be  carried  on  with  other  States  or  foreign 
countries  in  the  customary  modes  in  which  such  commerce  is  con- 
ducted by  water. 

If  we  apply  this  test  to  Grand  River,  the  conclusion  follows  that 
it  must  be  regarded  as  a  navigable  water  of  the  United  States. 
From  the  conceded  facts  in  the  case  the  stream  is  capable  of  bearing 
a  steamer  of  one  hundred  and  twenty-three  tons  burden,  laden  with 
merchandise  and  passengers,  as  far  as  Grand  Rapids,  a  distance 
of  forty  miles  from  its  mouth  in  Lake  Michigan.  And  by  its 
junction  with  the  lake  it  forms  a  continued  highway  for  commerce, 
both  with  other  States  and  with  foreign  countries,  and  is  thus  brought 


96  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

under  the  direct  control  of  Congress  in  the  exercise  of  its  com- 
mercial power.     *     *     *     * 

But  it  is  contended  that  the  steamer  Daniel  Ball  was  only  engaged 
in  the  internal  commerce  of  the  State  of  Michigan,  and  was  not, 
therefore,  required  to  be  inspected  or  licensed,  even  if  it  be  conceded 
that  Grand  River  is  a  navigable  water  of  the  United  States;  and 
this  brings  us  to  the  consideration  of  the  second  question  pre- 
sented. 

There  is  undoubtedly  an  internal  commerce  which  is  subject  to 
the  control  of  the  States.  The  power  delegated  to  Congress  is 
limited  to  commerce  "among  the  several  States,"  or  foreign  nations 
and  with  the  Indian  tribes.  This  limitation  necessarily  excludes 
from  Federal  control  all  commerce  not  thus  designated,  and  of 
course  that  commerce  which  is  carried  on  entirely  within  the  limits 
of  a  State,  and  does  not  extend  to  or  affect  other  States.  In  this 
case  it  is  admitted  that  the  steamer  was  engaged  in  shipping  and 
transporting  down  Grand  River,  goods  destined  and  marked  for 
other  States  than  Michigan,  and  in  receiving  and  transporting  up 
the  river  goods  brought  within  the  State  from  without  its  limits ; 
but  inasmuch  as  her  agency  in  the  transportation  was  entirely 
within  the  limits  of  the  State;  and  she  did  not  run  in  connection 
with,  or  in  continuation  of,  any  line  of  vessels  or  railway  leading 
to  other  States,  it  is  contended  that  she  was  engaged  entirely  in 
domestic  commerce.  But  this  conclusion  does  not  follow.  So  far 
as  she  was  employed  in  transporting  goods  destined  for  other 
States,  or  goods  brought  from  without  the  limits  of  Michigan  and 
destined  to  places  within  that  State,  she  was  engaged  in  commerce 
between  the  States,  and  however  limited  that  commerce  may  have 
been,  she  was,  so  far  as  it  went,  subject  to  the  legislation  of  Con- 
gress. She  was  employed  as  an  instrument  of  that  commerce;  for 
whenever  a  commodity  has  begun  to  move  as  an  article  of  trade 
from  one  State  to  another,  commerce  in  that  commodity  between 
the  States  has  commenced.  The  fact  that  several  different  and 
independent  agencies  are  employed  in  transporting  the  commodity, 
some  acting  entirely  in  one  State,  and  some  acting  through  two  or 
more  States,  does  in  no  respect  affect  the  character  of  the  trans- 
action. To  the  extent  in  which  each  agency  acts  in  that  transporta- 
tion, it  is  subject  to  the  regulation  of  Congress. 

It  is  said  that  if  the  position  here  asserted  be  sustained,  there  is 
no  such  thing  as  the  domestic  trade  of  a  State;  that  Congress  may 
take  the  entire  control  of  the  commerce  of  the  country,  and  extend 
its  regulations  to  the  railroads  within  a  State  on  which  grain  or 
fruit  is  transported  to  a  distant  market.  We  answer  that  the  present 
case  relates  to  transportation  on  the  navigable  waters  of  the  United 
States,  and  we  are  not  called  upon  to  express  an  opinion  upon 
the  power  of  Congress  over  interstate  commerce  when  carried  on 
by  land  transportation. 

Decree  of  the  Circuit  Court  is  Affirmed. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW,  97 

GLOUCESTER  FERRY  COMPANY  v.  PENNSYLVANIA. 
114  U.  S.,  196.     1885. 

The  Gloucester  Ferry  Company  was  incorporated  in  1865  under 
the  laws  of  the  State  of  New  Jersey  to  establish  a  steamboat  ferry 
from  the  town  of  Gloucester,  New  Jersey,  to  the  City  of  Philadel- 
phia, Pennsylvania.  It  established  and  has  maintained  such  a  ferry, 
and  has  at  the  places  named  a  slip  or  dock  on  which  passengers 
and  freight  are  received  and  landed.  The  dock  in  Philadelphia  is 
leased.  The  one  in  Gloucester  is  owned  by  the  company.  A  statute 
of  Pennsylvania,  passed  June  7,  1879,  provided  in  substance  that 
any  company  or  association  incorporated  in  Pennsylvania  or  else- 
where and  doing  business  within  the  State  should  pay  annually  a 
tax  computed  upon  its  capital  stock  according  to  the  dividends 
declared.  The  Court  of  Common  Pleas  of  Philadelphia  held  that 
the  tax  could  not  be  lawfully  levied  upon  the  company,  as  the  land- 
ing of  passengers  and  freight  was  the  only  business  carried  on  by 
the  company  in  the  State  and  was  protected  by  the  Constitution 
from  State  legislation  as  interstate  commerce.  The  Supreme  Court 
of  Pennsylvania  on  appeal  decided  in  favor  of  the  tax,  and  to  review 
this  judgment  an  appeal  was  taken  to  the  Supreme  Court  of  the 
United  States. 

MR.  JUSTICE  FIELD  delivered  the  opinion  of  the  court. 

*  *  *  *  As  to  the  first  reason  thus  expressed,  it  may  be  answered 
that  the  business  of  landing  and  receiving  passengers  and  freight 
at  the  wharf  in  Philadelphia  is  a  necessary  incident  to,  indeed,  is 
a  part  of,  their  transportation  across  the  Delaware  River  from  New 
Jersey.  Without  it  that  transportation  would  be  impossible.  Trans- 
portation implies  the  taking  up  of  persons  or  property  at  some- 
point  and  putting  them  down  at  another.  A  tax,  therefore,  upon, 
such  receiving  and  landing  of  passengers  and  freight  is  a  tax  upon 
their  transportation;  that  is,  upon  the  commerce  between  the  two 
States  involved  in  such  transportation.  *  *  *  *  Commerce 
among  the  States  consists  of  intercourse  and  traffic  between  their 
citizens,  and  includes  the  transportation  of  persons  and  property, 
and  the  navigation  of  public  waters  for  that  purpose,  as  well  as  the 
purchase,  sale  and  exchange  of  commodities.  The  power  to  regulate 
that  commerce,  as  well  as  commerce  with  foreign  nations,  vested  in 
Congress,  is  the  power  to  prescribe  the  rules  by  which  it  shall  be 
governed,  that  is,  the  conditions  upon  which  it  shall  be  conducted; 
to  determine  when  it  shall  be  free  and  when  subject  to  duties  or 
other  exactions. 

Judgment  of  the  Supreme  Court  of  Pennsylvania  is  reversed. 


Note. — In  City  of  Sault  Ste.  Marie  v.  International  Transit  Company,  234 
U.  S.  333  (June  8th,  1914),  the  Supreme  Court  declared  unconstitutional  an 
ordinance  of  the  City  of  Sault  Ste.  Marie,  Michigan,  requiring  a  license  fee 
for  the  operation  of  ferries  to  the  Canadian  shore.  The  defendant  company, 
a  Canadian  corporation,  was  the  owner  of  and  operated  a  steam  ferry  from 


98  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Sault  Ste.  Marie,  Ontario,  to  Sault  Ste.  Marie,  Michigan.  It  leased  a  private 
wharf  in  the  Michigan  city  and  maintained  an  office  where  fares  were  re- 
ceived. Under  State  authority,  a  license  fee  of  fifty  dollars  was  imposed 
by  the  ordinance  for  the  privilege  of  carrying  on  such  a  ferry.  The  court 
held  that  the  case  came  within  the  principle  of  Gloucester  Ferry  Company  v. 
Pennsylvania,  114  U.  S.  196,  that  one  cannot  be  compelled  to  take  out  a  local 
license  for  the  mere  privilege  of  carrying  on  interstate  or  foreign  commerce. 

4.     Meaning  of  the  Sherman  Anti-Trust  Law. 

UNITED  STATES  v.  TRANS-MISSOURI  FREIGHT  ASSO- 
CIATION. 

166  U.  S.  290,  1897. 
* 

The  United  States  Government  brought  suit  in  equity  in  the 
United  States  Circuit  Court  for  the  District  of  Kansas  against  the 
Trans-Missouri  Freight  Association,  and  the  several  railway  com- 
panies composing  the  said  association,  for  the  purpose  of  having 
declared  illegal  and  void  a  certain  agreement  entered  into  between 
the  said  railway  companies  for  mutual  protection,  and  to  establish 
and  maintain  rates,  rules  and  regulations  on  all  freight  traffic  in- 
cluded within  a  defined  territory.  The  United  States  asked  that 
the  said  association  of  the  railways  be  dissolved  and  a  perpetual 
injunction  be  granted  against  any  similar  combination  and  associa- 
tion in  the  future  of  such  constituent  railways.  The  basis  of  the 
government's  contention  was  that  the  agreement  in  question  was 
contrary  to  the  Sherman  Anti-Trust  Law,*  as  being  in  restraint  of 
trade  among  the  States.  The  lower  court  dismissed  the  govern- 
ment's suit.  The  case  was  carried  on  appeal  to  the  Supreme 
Court. 

Sections  of  the  agreement  are  in  part  as  follows : 

That  "a  committee  >  shall  be  appointed  to  establish  rates,  rules 
and  regulations  on  the  traffic  subject  of  this  association,  and  to 
consider  changes  therein,  and  make  rules  for  meeting  the  competi- 
tion of  outside  lines.  Their  conclusions,  when  unanimous,  shall 
be  made  effective  when  they  so  order,  but  if  they  differ  the  question 
at  issue  shall  be  referred  to  the  managers  of  the  lines  parties  hereto ; 
and  if  they  disagree  it  shall  be  arbitrated  in  the  manner  provided 
in  article  7." 

That  "at  least  five  days'  written  notice  prior  to  each  monthly 
meeting  shall  be  given  the  chairman  of  any  proposed  reduction  in 
rates  or  change  in  any  rule  or  regulation  governing  freight  traffic; 
eight  days  in  so  far  as  applicable  to  the  traffic  of  Colorado  or 
Utah.  *  *  *  * 

At  each  monthly  meeting,  the  association  shall  consider  and  vote 
upon  all  changes  proposed,  of  which  due  notice  has  been  given,  and 
all  parties  shall  be  bound  by  the  decisions  of  the  association,  as 

Note. — For  the  provisions  of  the  Sherman  Anti-Trust  Act  see  Appendix. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  99 

expressed,  unless  then  and  there  the  parties  shall  give  the  associa- 
tion definite  written  notice  that  in  ten  days  thereafter,  they  shall 
make  such  modification  notwithstanding  the  vote  of  the  association : 
Provided,  That  if  the  member  giving  notice  of  change  shall  fail 
to  be  represented  at  the  meeting,  no  action  shall  be  taken  on  its 
notice,  and  the  same  shall  be  considered  withdrawn.  Should  any 
member  insist  upon  a  reduction  of  rate  against  the  views  of  the 
majority,  or  if  the  majority  favors  the  same,  and  if,  in  the  judg- 
ment of  such  majority  the  rate  so  made  effects  seriously  the  rates 
upon  other  traffic,  then  the  association  may,  by  a  majority  vote, 
upon  such  other  traffic  put  into  effect  corresponding  rates  to  take 
effect  on  the  same  day.  By  unanimous  consent,  any  rate,  rule  or 
regulation  relating  to  freight  traffic  may  be  modified  at  any  meeting 
of  the  association  without  previous  notice. 

It  shall  be  the  duty  of  the  chairman  to  investigate  all  apparent 
violations  of  the  agreement,  and  to  report  his  findings  to  the  man- 
agers, who  shall  determine  by  a  majority  vote  (the  member  against 
whom  complaint  is  made  to  have  no  vote)  what,  if  any,  penalty 
shall  be  assessed,  the  amount  of  each  fine  not  to  exceed  $100,  to 
be  paid  to  the  association.  If  any  line  party  hereto  agrees  with  a 
shipper,  or  anyone  else,  to  secure  a  reduction  or  change  in  rates, 
or  change  in  the  rules  and  regulations,  and  it  is  shown  upon  investi- 
gation by  the  chairman  that  such  an  arrangement  was  effected  and 
traffic  thereby  secured,  such  action  shall  be  reported  to  the  man- 
agers, who  shall  determine  as  above  provided,  what,  if  any,  penalty 
shall  be  necessary. 

MR.  JUSTICE  PECKHAM  delivered  the  opinion  of  the  court. 

Coming  to  the  merits  of  the  suit  there  are  two  important  ques- 
tions which  demand  our  examination.  They  are,  first,  whether 
the  above  cited  Act  of  Congress  (called  herein  the  Trust  Act) 
applies  to  and  covers  common  carriers  by  railroad ;  and  if  so,  second, 
Does  the  agreement  set  forth  in  the  bill  violate  any  provision  of 
that  Act? 

As  to  the  first  question. 

The  language  of  the  act  includes  every  contract,  combination  in 
the  form  of  trust  or  otherwise,  or  conspiracy  in  the  restraint  of 
trade  or  commerce  among  the  several  States  or  with  foreign 
nations.  So  far  as  the  very  terms  of  the  statute  go,  they  apply  to 
any  contract  of  the  nature  described.  A  contract  therefore  that 
is  in  restraint  of  trade  or  commerce  is  by  the  strict  language  of 
the  act  prohibited  even  though  such  contract  is  entered  into  between 
competing  common  carriers  by  railroad,  and  only  for  the  purposes 
of  thereby  effecting  traffic  rates  for  the  transportation  of  persons 
and  property.  If  such  an  agreement  restrain  trade  or  commerce,  it 
is  prohibited  by  the  statute,  unless  it  can  be  said  that  an  agreement, 
no  matter  what  its  terms,  relating  only  to  transportation,  cannot 
restrain  trade  or  commerce.  We  see  no  escape  from  the  conclu- 
sion that  if  any  agreement  of  such  a  nature  does  restrain  it,  the 
agreement  is  condemned  by  this  act.  It  cannot  be  denied  that 


-  to 


ioo  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

those  who  are  engaged  in  the  transportation  of  persons  or  property 
from  one  State  to  another  are  engaged  in  interstate  commerce,  and 
it  would  seem  to  follow  that  if  such  persons  enter  into  agreements 
between  themselves  in  regard  to  the  compensation  to  be  secured 
from  the  owners  of  the  articles  transported,  such  agreement  would 
at  least  relate  to  the  business  of  commerce  and  might  more  or  les$ 
restrain  it.  The  point  urged  on  the  defendents'  part  is  that  the 
statute  was  not  really  intended  to  reach  that  kind  of  an  agreement 
relating  only  to  traffic  rates  entered  into  by  competing  common 
carriers  by  railroad;  that  it  was  intended  to  reach  only  those  who 
were  engaged  in  the  manufacture  or  sale  of  articles  of  commerce, 
and  who  by  means  of  trusts,  combinations  and  conspiracies  were 
engaged  in  effecting  the  supply  or  the  price  or  the  place  of  manu- 
facture of  such  articles.  The  terms  of  the  act  do  not  bear  out 
such  construction.  Railroad  companies  are  instruments  of  com- 
merce, and  their  business  is  commerce  itself.  Philadelphia  &  R.  R. 
Co.  v.  Pennsylvania  ("State  Freight  Tax"),  82  U.  S.  15  Wall,  23; 
Western  \Jnion  Telegraph  Co.  v.  Texas,  105  U.  S.  460. 

An  act  which  prohibits  the  making  of  every  contract,  etc.,  in 
restraint  of  trade  or  commerce  among  the  several  States,  would 
seem  to  cover  by  such  language  a  contract  between  competing  rail- 
roads, and  relating  to  traffic  rates  for  the  transportation  of  articles 
of  commerce  between  the  States,  provided  such  contract  by  its  direct 
effect  produces  a  restraint  of  trade  or  commerce.  What  amounts 
to  a  restraint  within  the  meaning  of  the  act  if  thus  construed  need 
not  now  be  discussed.  *  *  *  * 

It  is  said  that  Congress  had  very  different  matters  in  view  and 
very  different  objects  to  accomplish  in  the  passage  of  the  act  in 
question;  that  a  number  of  combinations  in  the  form  of  trusts  and 
conspiracies  in  restraint  of  trade  were  to  be  found  throughout  the 
country,  and  that  it  was  impossible  for  the  State  governments  to 
successfully  cope  with  them  because  of  their  commercial  character 
and  of  their  business  extension  through  the  different  States  of  the 
Union.  Among  these  trusts  it  was  said  in  Congress  were  the  Beef 
Trust,  the  Standard  Oil  Trust,  the  Steel  Trust,  the  Barbed  Fence 
Wire  Trust,  the  Sugar  Trust,  the  Cordage  Trust,  the  Cotton  Seed 
Oil  Trust,  the  Whiskey  Trust,  and  many  others,  and  these  trusts  it 
was  stated  had  assumed  an  importance  and  had  acquired  a  power 
which  were  dangerous  to  the  whole  country,  and  that  their  existence 
was  directly  antagonistic  to  its  peace  and  prosperity.  To  combina- 
tions and  conspiracies  of  this  kind  it  is  contended  that  the  act  in 
question  was  directed  and  not  to  the  combinations  of  competing 
railroads  to  keep  up  their  prices  to  a  reasonable  sum  for  the 
transportation  of  persons  and  property.  It  is  true  that  many  and 
various  trusts  were  in  existence  at  the  time  of  the  passage  of  the 
act,  and  it  was  probably  sought  to  cover  them  by  the  provisions  of 
the  act.  Many  of  them  had  rendered  themselves  offensive  by  the 
manner  in  which  they  exercised  the  great  power  that  combined 
capital  gave  them.  But  a  further  investigation  of  "the  history  of 
the  times"  shows  also  that  those  trusts  were  not  the  only  associa- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  101 

tions  controlling  a  great  combination  of  capital  which  had  caused 
complaint  at  the  manner  in  which  their  business  was  conducted. 
There  were  many  and  loud  complaints  from  some  portions  of  the 
public  regarding  the  railroads  and  the  prices  they  were  charging  for 
the  service  they  rendered,  and  it  was  alleged  that  the  prices  for 
the  transportation  of  persons  and  articles  of  commerce  were  unduly 
and  improperly  enhanced  by  combinations  among  the  different 
roads.  Whether  these  complaints  were  well  or  ill  founded  we  do 
not  presume  at  this  time  and  under  these  circumstances  to  determine 
or  to  discuss.  It  is  simply  for  the  purpose  of  answering  the  state- 
ment that  it  was  only  to  trusts  of  the  nature  as  above  set  forth 
that  this  legislation  was  directed,  that  the  subject  of  the  opinions 
of  the  people  in  regard  to  the  actions  of  the  railroad  companies  in 
this  particular  is  referred.  A  reference  to  this  history  of  the  times 
does  not,  as  we  think,  furnish  us  with  any  strong  reason  for  be- 
lieving that  it  was  only  trusts  that  were  in  the  minds  of  the  mem- 
bers of  Congress,  and  that  railroads  and  their  manner  of  doing 
business  were  wholly  excluded  therefrom.  *  *  *  * 

The  next  question  to  be  discussed  is  to  what  is  the  true  con- 
struction of  the  statute,  assuming  that  it  applies  to  common  car- 
riers by  railroad.  What  is  the  meaning  of  the  language  as  used 
in  the  statute  that  "every  contract,  combination  in  the  form  of 
trust  or  otherwise  or  conspiracy  in  restraint  of  trade  or  commerce 
among  the  several  states  or  with  foreign  nations  is  hereby  declared 
to  be  illegal?"  Is  is  confined  to  a  contract  or  combination  which 
is  only  in  unreasonable  restraint  of  trade  or  commerce,  or  does  it 
include  what  the  language  of  the  act  plainly  and  in  terms  covers 
all  contracts  of  that  nature.  *  *  *  *  It  is  to  the  statute  itself 
that  resort  must  be  had  to  learn  the  meaning  thereof,  though  a 
resort  to  the  title  Here  creates  no  doubt  about  the  meaning  of  and 
does  not  alter  the  plain  language  contained  in  its  text. 

It  is  now  with  much  amplification  of  argument  urged  that  the 
statute  in  declaring  illegal  every  combination  in  the  form  of  trust 
or  otherwise,  or  conspiracy  in  restraint  of  trade  or  commerce,  does 
not  mean  what  the  language  used  therein  plainly  imports,  but  that 
it  only  means  to  declare  illegal  any  such  contract  which  is  in  un- 
reasonable restraint  of  trade,  while  leaving  all  others  unaffected 
by  the  provisions  of  the  act;  that  the  common  law  meaning  of  the 
term  "contract  in  restraint  of  trade"  includes  only  such  contracts  as 
are  in  unreasonable  restraint  of  trade  and  when  that  term  is  used 
in  the  Federal  statute  it  is  not  intended  to  include  all  contracts  in 
restraint  of  trade  thereof. 

The  term  is  not  of  such  limited  signification.  Contracts  in  re- 
straint of  trade  have  been  known  and  spoken  of  for  hundreds 
of  years  both  in  England  and  this  country  and  the  term  includes 
all  kinds  of  those  contracts  which  in  fact  restrain  or  may  restrain 
trade.  Some  of  such  contracts  have  been  held  void  and  unen- 
forceable in  the  courts  by  reason  of  their  restraint  being  unreason- 
able, while  others  have  been  held  valid  because  they  were  not 
of  that  nature.  A  contract  may  be  in  restraint  of  trade  and  still 


102  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

be  valid  at  common  law.  Although  valid,  it  is  nevertheless  a  con- 
tract in  restraint  of  trade  and  would  be  so  described  either  at  com- 
mon law  or  elsewhere.  By  the  simple  use  of  the  term  "contract 
in  restraint  of  trade,"  all  contracts  of  that  nature  whether  valid 
or  otherwise  would  be  included,  and  not  alone  that  kind  of  contract 
which  was  invalid  and  unenforceable  as  being  in  unreasonable  re- 
straint of  trade.  When,  therefore,  the  body  of  an  act  pronounces 
as  illegal  every  contract  or  combination  in  restraint  of  trade  or 
commerce  among  the  several  states,  etc.,  the  plain  and  ordinary 
meaning  of  such  language  is  not  limited  to  that  kind  of  contract 
alone  which  is  in  unreasonable  restraint  of  trade,  but  all  contracts 
are  included  in  such  language  and  no  exception  or  limitation  can 
be  added  without  placing  in  the  act  that  which  has  been  omitted 
by  Congress.  *  *  *  * 

The  great  stress  of  the  argument  for  the  defendents  on  this 
branch  of  the  case  has  been  to  show,  if  possible,  some  reason  in 
the  attendent  circumstances,  or  some  fact  existing  in  the  nature 
of  railroad  property  and  business  upon  which  to  found  the  claim 
that  although  by  the  language  of  the  statute  agreements  or  combi- 
nations in  restraint  of  trade  or  commerce  are  included,  the  statute 
really  means  to  declare  illegal  only  those  contracts,  etc.,  which 
are  in  unreasonable  restraint  of  trade.  In  order  to  do  this  the 
defendants  call  attention  to  many  facts  which  they  have  already 
referred  to  in  their  argument,  upon  the  point  that  railroads  were 
not  included  at  all  in  the  statute.  They  again  call  attention  to 
the  fact  of  the  peculiar  nature  of  railroad  property.  When  a  rail- 
road is  once  built,  it  is  said  it  must  be  kept  in  operation;  it  must 
transport  property,  when  necessary  in  order  to  keep  its  business 
at  the  smallest  price  and  for  the  narrowest  profit,  or  even  for  no 
profit,  provided  running  expenses  can  be  paid,  rather  than  not  do 
the  work ;  that  railroad  property  cannot  be  altered  for  use  for 
any  other  purpose,  at  least  without  such  loss  as  may  fairly  be 
called  destructive ;  that  competition,  while,  perhaps,  right  and  proper 
in  other  business,  simply  leads  in  railroad  business  to  financial  ruin 
and  insolvency,  and  to  the  operation  of  the  road  by  receivers  in  the 
interest  of  its  creditors  instead  of  in  that  of  its  owners  and  the 
public.  *  *  *  * 

To  the  question  why  competition  should  necessarily  be  conducted 
to  such  an  extent  as  to  result  in  this  relentless  and  continued  war, 
to  eventuate  only  in  the  financial  ruin  of  one  or  all  of  the  com- 
panies indulging  in  it,  the  answer  is  made  that  if  competing  rail- 
road companies  be  left  subject  to  the  sway  of  free  and  unrestricted 
competition  the  results  above  foreshadowed  necessarily  happen  from 
the  nature  of  the  case;  that  competition  being  the  rule,  each  com- 
pany will  seek  business  to  the  extent  of  its  power,  and  will  under- 
bid its  rival  in  order  to  get  the  business,  and  such  underbidding  will 
act  and  react  upon  each  company  until  the  prices  are  so  reduced 
as  to  make  it  impossible  to  prosper  or  live  under  them ;  that  it  is 
too  much  to  ask  of  human  nature  for  one  company  to  insist  upon 
charges  sufficiently  high  to  afford  a  reasonable  compensation,  and 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  103 

wtfiile  doing  so  to  see  its  patrons  leave  for  rival  roads  who  are 
obtaining  its  business  by  offering  less  rates  for  doing  it  than  can 
be  afforded  and  a  fair  profit  obtained  therefrom.  Sooner  than 
experience  ruin  from  mere  inanition  efforts  will  be  made  in  the 
direction  of  meeting  the  underbidding  of  its  rival  until  both  shall 
end  in  ruin.  The  only  refuge,  it  is  said,  from  this  wretched  end 
lies  in  the  power  of  competing  roads  agreeing  among  themselves 
to  keep  up  prices  for  transportation  to  such  sums  as  shall  be  rea- 
sonable in  themselves,  so  that  companies  may  be  allowed  to  save 
themselves  and  to  agree  not  to  attack  each  other,  but  to  keep  up 
reasonable  and  living  rates  for  the  services  performed.  It  is  said 
that  as  railroads  have  a  right  to  charge  reasonable  rates  it  must 
follow  that  a  contract  among  themselves  to  keep  up  their  charges 
to  that  extent  is  valid.  Viewed  in  the  light  of  all  these  facts  it  is 
broadly  and  confidently  asserted  that  it  is  impossible  to  believe 
that  Congress  or  any  other  intelligent  and  honest  legislative  body 
could  ever  have  intended  to  include  all  contracts  or  combinations 
in  restraint  of  trade,  and  as  a  consequence  thereof  to  prohibit  com- 
peting railways  from  agreeing  among  themselves  to  keep  up  prices 
for  transportation  to  such  a  rate  as  should  be  fair  and  reasonable. 

These  arguments,  it  must  be  confessed,  bear  with  much  force 
upon  a  policy  of  an  act  which  should  prevent  a  general  agreement 
upon  the  question  of  rates  among  competing  railroad  companies  to 
the  extent  simply  of  maintaining  those  rates  which  were  reasonable 
and  fair. 

There  is  another  side  to  this  question,  however,  and  it  may  not 
be  amiss  to  refer  to  one  or  two  facts  which  tend  to  somewhat 
modify  and  alter  the  light  in  which  the  subject  should  be  regarded. 
If  only  that  kind  of  contract  which  is  in  unreasonable  restraint 
of  trade  be  within  the  meaning  of  the  statute  and  declared  therein 
to  be  illegal,  it  is  at  once  apparent  that  the  subject  of  what  is  a 
reasonable  rate  is  attended  with  great  uncertainty.  What  is  a  proper 
standard  by  which  to  judge  the  fact  of  reasonable  rates?  Must  the 
rate  be  so  high  as  to  enable  the  return  for  the  whole  business  done 
to  amount  to  a  sum  sufficient  to  afford  the  shareholder  a  fair  and 
reasonable  profit  upon  his  investment?  If  so,  what  is  a  fair  and 
reasonable  profit?  That  depends  sometimes  upon  the  risk  incurred 
and  the  rate  itself  differs  in  different  localities.  Which  is  the  one 
to  which  reference  is  to  be  made  as  the  standard?  Or  is  the  rea- 
sonableness of  the  profit  to  be  limited  to  a  fair  return  upon  the 
capital  that  would  have  been  sufficient  to  build  and  equip  the  road 
if  honestly  expended  or  is  still  another  standard  to  be  created,  and 
the  reasonableness  of  the  charges  tried  by  the  cost  of  the  carriage 
of  the  article  and  a  reasonable  profit  allowed  on  that?  And  in 
such  a  case  would  contribution  to  a  sinking  fund  to  make  repairs 
upon  the  roadbed  and  renewal  of  cars,  etc.,  be  assumed  as  a  proper 
item?  Or  is  the  reasonableness  of  the  charges  to  be  tested  by 
reference  to  the  charges  for  the  transportation  of  the  same  kind  of 
property  made  by  other  roads  similarly  situated?  If  the  latter,  a 
combination  among  such  roads  as  to  rates  would,  of  course,  fur- 


104  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

nish  no  means  of  answering  the  question.  It  is  quite  apparent, 
therefore,  that  it  is  exceedingly  difficult  to  formulate  even  the  terms 
of  the  rule  itself  which  should  govern  in  the  matter  of  determining 
what  would  be  reasonable  rates  for  transportation.  While  even 
after  the  standard  should  be  determined  there  is  such  an  infinite 
variety  of  facts  entering  into  the  question  of  what, is  a  reasonable 
rate  no  matter  what  standard  is  adopted,  that  any  individual  shipper 
would  in  most  cases  be  apt  to  abandon  the  effort  to  show  the  un- 
reasonable character  of  a  charge,  sooner  than  hazard  the  great 
expense  in  time  and  money  necessary  to  prove  the  fact,  and  at  the 
same  time  incur  the  ill  will  of  the  road  itself  in  all  his  future  deal- 
ings with  it.  To  say,  therefore,  that  the  act  excludes  agreements 
which  are  not  in  unreasonable  restraint  of  trade,  and  which  tend 
simply  to  keep  up  reasonable  rates  for  transportation,  is  substantially 
to  leave  the  question  of  reasonableness  to  the  companies  them- 
selves. *  *  *  *  The  general  reasons  for  holding  agreements 
of  this  nature  to  be  invalid  even  at  common  law,  on  the  part  of 
railroad  companies  are  quite  strong,  if  not  entirely  conclusive. 

Considering  the  public  character  of  such  corporations  the  privi- 
leges and  franchises  which  they  have  received  from  the  public 
in  order  that  they  might  transact  business,  and  bearing  in  mind 
how  closely  and  immediately  the  question  of  rates  for  transportation 
effects  the  whole  public,  it  may  be  urged  that  Congress  had  in 
mind  all  the  difficulties  which  we  have  before  suggested  of  proving 
the  unreasonableness  of  the  rate,  and  might  in  consideration  of 
all  the  circumstances  have  deliberately  decided  to  prohibit  all 
agreements  and  combinations  in  restraint  of  trade  or  commerce 
regardless  of  the  question  whether  such  agreements  were  reasonable 
or  the  reverse.  *  *  *  * 

The  claim  that  the  company  has  the  right  to  charge  reasonable 
rates,  and  that,  therefore,  it  has  the  right  to  enter  into  a  combination 
with  competing  roads  to  maintain  such  rates,  cannot  be  admitted. 
The  conclusion  does  not  follow  from  an  admission  of  the  premise. 
What  one  company  may  do  in  the  way  of  charging  reasonable 
rates  is  radically  different  from  entering  into  an  agreement  with 
other  and  competing  roads  to  keep  up  the  rates  to  that  point.  If 
there  be  any  competition  the  extent  of  the  charge  for  the  service 
will  be  seriously  effected  by  that  fact.  Competition  will  itself  bring 
charges  down  to  what  may  be  reasonable,  while  in  the  case  of  an 
agreement  to  keep  prices  up,  competition  is  allowed  no  play ; 
it  is  shut  out,  and  the  rate  is  practically  fixed  by  the  companies 
themselves  by  virtue  of  the  agreement,  so  long  as  they  abide  by  it. 

As  a  result  of  this  review  of  the  situation,  we  find  two  very 
widely  divergent  views  of  the  effects  which  might  be  expected  to 
result  from  declaring  illegal  all  contracts  in  restraint  of  trade,  etc. ; 
one  side  predicting  financial  disaster  and  ruin  to  competing  railroads, 
including  thereby  the  ruin  of  shareholders,  the  destruction  of  im- 
mensely valuable  properties,  and  the  consequent  prejudice  to  the 
public  interest ;  while  on  the  other  side  predictions  equally  earnest 
are  made  that  no  such  mournful  results  will  follow,  and  it  is  urged 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  105 

that  there  is  a  necessity,  in  order  that  the  public  interests  may  be 
fairly  and  justly  protected,  to  allow  free  and  open  competition  among 
railroads  upon  the  subject  of  the  rates  for  the  transportation  of 
persons  and  property.  *  *  *  * 

The  conclusion  which  we  have  drawn  from  the  examination  above 
made  into  the  question  before  us  is  that  the  anti-trust  act  applies 
to  railroads,  and  that  it  renders  illegal  all  agreements  which  are 
in  restraint  of  trade  or  commerce  as  we  have  above  defined  that 
expression,  and  the  question  then  arises  whether  the  agreement 
before  us  is  of  that  nature.  *  *  *  * 

Does  the  agreement  restrain  trade  or  commerce  in  any  way  so 
as  to  be  a  violation  of  the  act?  We  have  no  doubt  that  it  does. 
The  agreement  on  its  face  recites  that  it  is  entered  into  "for  the 
purpose  of  mutual  protection  by  establishing  and  maintaining  rea- 
sonable rates,  rules  and  regulations  on  all  freight  traffic,  both  through 
and  local."  To  that  end  the  association  is  formed  and  a  body 
created  which  is  to  adopt  rates,  which,  when  agreed  to,  are  to  be 
the  governing  rates  for  all'  the  companies,  and  a  violation  of  which 
subjects  the  defaulting  company  to  the  payment  of  a  penalty,  and 
although  the  parties  have  a  right  to  withdraw  from  the  agreement 
on  giving  thirty  days'  notice  of  a  desire  so  to  do,  yet  while  in  force 
and  assuming  it  to  be  lived  up  to,  there  can  be  no  doubt  that  its 
direct,  immediate  and  necessary  effect  is  to  put  a  restraint  upon 
trade  or  commerce  as  described  in  the  act. 

For  these  reasons  the  suit  of  the  government  can  be  maintained 
without  proof  of  the  allegation  that  the  agreement  was  entered  into 
for  the  purpose  of  restraining  trade  or  commerce  or  for  maintain- 
ing rates  above  what  was  reasonable.  The  necessary  effect  of  the 
agreement  is  to  restrain  trade  or  commerce,  no  matter  what  the 
intent  was  on  the  part  of  those  who  signed  it. 

For  the  reasons  given,  the  decree  of  the  United  States  Circuit 
Court  of  Appeals  and  the  Circuit  Court  for  the  District  of  Kansas 
must  be  reversed,  and  the  case  remanded  to  the  circuit  court  for 
further  proceedings  in  conformity  with  this  opinion. 


NORTHERN  SECURITIES  COMPANY  v.  UNITED  STATES. 
193  U.  S.,  197.     1903. 

Suit  was  brought  by  the  United  States  Government  against  the 
Northern  Securities  Company,  a  corporation  of  New  Jersey;  the 
Great  Northern  Railway  Company,  a  corporation  of  Minnesota; 
the  Northern  Pacific  Railway  Company,  a  corporation  of  Wisconsin, 
and  other  co-defendants.  The  object  of  the  proceeding  was  to 
enforce  against  the  defendants  the  provisions  of  the  act  of  July  2, 
1890,  known  as  the  "Anti-Trust  Act." 

The  stockholders  of  the  Great  Northern  and  Northern  Pacific 
Railway  Companies,  corporations  with  competing  and  practically 
parallel  railway  lines  extending  from  the  Great  Lakes  to  Puget 


io6  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Sound,  had  organized  the  Northern  Securities  Company,  as  a  hold- 
ing company  for  the  shares  of  stock  of  the  two  competing  com- 
panies. The  plan  of  combination  was  to  transfer  to  the  Securities- 
Company  the  shares  of  stock  of  the  constituent  companies,  and  the 
stockholders  of  each  company  were  to  receive  in  return  upon  an 
agreed  basis  of  value  shares  of  the  holding  company.  In  this  way, 
the  Northern  Securities  Company  became  the  holder  and  custodian 
of  more  than  nine-tenths  of  Northern  Pacific  Company  stock,  and 
three-fourths  of  Great  Northern  Company  stock. 

The  United  States  Government  charged  that  the  combination  was 
in  violation  of  the  Anti-Trust  law,  in  that  it  prevented  free  com- 
petition among  carriers  engaged  in  interstate  commerce,  and  that 
it  was  a  conspiracy  to  monopolize  trade  and  commerce  among  the 
several  States. 

The  United  States  Circuit  Court  in  Minnesota  sustained  the  con- 
tention of  the  government.  An  appeal  was  then  taken  to  the 
Supreme  Court  of  the  United  States. 

MR.  JUSTICE  HARLAN  delivered  the  opinion  of  the  court. 

Necessarily  by  this  combination  or  arrangement  the  holding  com- 
pany in  the  fullest  sense  dominates  the  situation  in  the  interest  of 
those  who  were  stockholders  of  the  constituent  companies ;  so  much 
so,  for  every  practical  purpose,  as  if  it  had  been  itself  a  railroad 
corporation  which  had  built,  owned  and  operated  both  lines  for  the 
exclusive  benefit  of  its  stockholders.  Necessarily,  also,  the  con- 
stituent companies  ceased,  under  such  a  combination,  to  be  in, 
active  competition  for  trade  and  commerce  along  their  respective 
lines,  and  have  become,  practically,  one  powerful  consolidated 
corporation,  by  the  name  of  a  holding  company,  the  principal,  if 
not  the  sole,  object  for  the  formation  of  which  was  to  carry  out 
the  purpose  of  the  original  combination  under  which  the  competi- 
tion between  the  constituent  companies  would  cease.  *  *  *  No 
scheme  or  device  could  more  certainly  come  within  the  words  of 
the  act — "combination  in  the  form  of  a  trust  or  otherwise.  *  *  * 
in  restraint  of  commerce  among  the  several  States  or  with  foreign 
nations," — or  could  more  effectively  and  certainly  suppress  free 
competition  between  the  constituent  companies.  This  combination 
is,  within  the  meaning  of  the  act,  a  "trust ;"  but  if  not,  it  is  a  com- 
bination in  restraint  of  interstate  and  international  commerce,  and 
that  is  enough  to  bring  it  under  the  condemnation  of  the  act.  The 
mere  existence  of  such  a  combination  and  the  power  acquired  by 
the  holding  company  as  its  trustee,  constitute  a  menace  to,  and  a 
restraint  upon,  that  freedom  of  commerce  which  Congress  intended 
to  recognize  and  protect,  and  which  the  public  is  entitled  to  have 
protected.  If  such  a  combination  be  not  destroyed,  all  the  advan- 
tages that  would  naturally  come  to  the  public  under  the  operation 
of  the  general  laws  of  competition,  as  between  the  Great  Northern 
and  Northern  Pacific  Railway  Companies,  will  be  lost,  and  the  en- 
tire commerce  of  the  immense  territory  in  the  northern  part  of  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  107 

United  States  between  the  Great  Lakes  and  the  Pacific  at  Puget 
Sound  will  be  at  the  mercy  of  a  single  holding  corporation,  organ- 
ized in  a  State  distant  from  the  people  of  that  territory.  *  *  *  * 

Judgment  of  lower  court  is  affirmed. 

UNITED  STATES  v.  UNION  PACIFIC  RAILROAD  CO. 

UNION  PACIFIC  MERGER  CASE. 

226  U.  S.,  61.     December  2,  1912. 

This  case  was  begun  in  the  United  States  Circuit  Court  for  the 
District  of  Utah  to  enforce  the  provisions  of  the  so-called  Sherman 
Anti-Trust  Act  of  1890  against  certain  alleged  conspiracies  and 
combinations  in  restraint  of  interstate  commerce.  The  case  in  its 
principal  aspect  grew  out  of  the  purchase  by  the  Union  Pacific 
Railroad  Company  in  the  month  of  February,  1901,  of  certain 
shares  of  the  capital  stock  of  the  Southern  Pacific  Company  from 
the  devisees  under  the  will  of  Collis  P.  Huntington,  who  had 
formerly  owned  the  stock.  Other  shares  of  Southern  Pacific  stock 
were  acquired  at  the  same  time,  the  holding  of  the  Union  Pacific 
amounting  to  750,000  shares,  or  about  371/£  per  cent,  (subsequently 
increased  to  46  per  cent.)  of  the  outstanding  stock  of  the  Southern 
Pacific  Company.  The  stock  was  held  for  the  Union  Pacific  Com- 
pany by  one  of  its  proprietary  companies,  the  Oregon  Short  Line 
Railroad  Company. 

Prior  to  the  stock  purchase  in  1901  the  Union  Pacific  system 
may  briefly  be  described  as  a  line  of  railroad  from  the  Missouri 
River  to  the  Pacific  Coast ;  namely,  from  Omaha,  Nebraska,  or 
perhaps  more  strictly  from  Council  Bluffs,  Iowa;  and  from  Kansas 
City,  Missouri,  to  Ogden,  Utah,  and  Portland,  Oregon,  with  various 
branches  and  connections  and  a  line  of  steamships  from  Portland 
to  San  Francisco,  California,  and  from  Portland  to  the  Orient ; 
and  a  line  of  steamships  from  San  Francisco  to  the  Orient  (the 
Occidental  &  Oriental  Steamship  Company),  in  which  the  Union 
Pacific  and  the  Southern  Pacific  each  owned  a  half  interest.  The 
main  line  from  Council  Bluffs  to  Ogden,  a  little  over  1,000  miles 
in  length,  with  the  branch  from  Kansas  City,  through  Denver,  Col- 
orado, to  Cheyenne,  Wyoming,  on  the  main  line,  was  owned  and 
operated  by  the  Union  Pacific ;  the  line  from  Granger,  Wyoming, 
on  the  main  line  of  the  Union  Pacific,  to  Huntington,  Oregon,  was 
owned  and  operated  by  the  Oregon  Short  Line  Railroad  Company, 
the  capital  stock  of  which  was  owned  by  the  Union  Pacific ;  and 
the  line  from  Huntington  to  Portland  was  owned  and  operated  by 
the  Oregon  Railroad  &  Navigation  Company,  the  stock  ownership 
of  which  was  in  the  Oregon  Short  Line.  The  boat  line  from  Port- 
land to  San  Francisco  and  to  the  Orient,  the  Portland  &  Asiatic 
Steamship  Company,  was  organized  'early  in  1901,  its  stock  being 
owned  by  the  Oregon  Railroad  &  Navigation  Company. 

The  Southern  Pacific  Company,  a  holding  company  of  the  State 
of  Kentucky,  also  engaged  in  operating  certain  lines  of  railroad 
under  lease,  controlled  a  line  of  railroad  extending  from  New 


io8  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Orleans  through  Louisiana,  Texas,  New  Mexico,  Arizona,  Cali- 
fornia, and  Oregon  to  Portland,  reaching  Los  Angeles  and  San 
Francisco,  with  several  branch  lines  and  connections  extending  into 
tributary  territory.  A  line  of  boats  running  between  New  York 
and  New  Orleans  was  also  owned  and  operated  by  the  Southern 
Pacific,  and  later  the  same  ships  entered  the  port  of  Galveston, 
where  also  the  Southern  Pacific  reached  tidewater,  and  it  had 
branches  extending  to  various  points  in  Northern  Texas,  connecting 
with  other  lines  of  road.  The  Southern  Pacific  also  operated, 
under  lease,  the  railroad  of  the  Central  Pacific  Railway  Company, 
all  the  stock  of  which  is  owned  by  the  Southern  Pacific.  The  lines 
of  the  Central  Pacific  consisted  of  the  road  from  San  Francisco 
to  Ogden,  about  800  miles  in  length,  and  connecting  at  the  latter 
place  with  the  Union  Pacific  and  the  Denver  &  Rio  Grande  Railroad 
Company's  line.  It  also  had  various  branches  in  and  about  Cali- 
fornia, aggregating  in  mileage  about  500  miles.  The  Southern 
Pacific  also  owned  a  majority  of  the  stock  of  the  Pacific  Mail 
Steamship  Company,  which  operated  a  line  of  steamships  plying 
to  ports  in  the  Orient  and  running  between  San  Francisco  and 
Panama. 

The  government  contended  that  prior  to  the  stock  purchase  de- 
scribed above,  the  Union  Pacific  and  Southern  Pacific  were  com- 
peting systems  of  railroad  engaged  in  interstate  commerce,  and 
that  since  the  acquisition  of  the  stock  the  dominating  power  of  the 
Union  Pacific  had  eliminated  competition  between  the  two  systems, 
which  made  the  combination  one  in  restraint  of  trade  within  the 
meaning  of  the  Anti-Trust  Act. 

The  lower  court  dismissed  the  government's  suit,  from  which 
decision  an  appeal  was  taken  to  the  United  States  Supreme  Court. 

MR.  JUSTICE  DAY  delivered  the  opinion  of  the  court. 

In  the  Northern  Securities  Co.  v.  United  States,  193  U.  S.  197, 
this  court  dealt  with  a  combination  differing  in  character  from  that 
considered  in  the  Trans-Missouri  and  Joint  Traffic  Cases,  and  it 
was  there  held  that  the  transfer  to  a  holding  company  of  the  stock 
of  two  competing  interstate  railroads,  thereby  effectually  destroy- 
ing the  power  which  had  theretofore  existed  to  compete  in  interstate 
commerce,  was  a  restraint  upon  such  commerce,  and  Mr.  Justice 
Harlan,  announcing  the  affirmance  of  the  decree  of  the  circuit  court, 
said  (p.  337) : 

"In  all  the  prior  cases  in  this  court  the  Anti-Trust  Act  has  been 
construed  as  forbidding  any  combination  which,  by  its  necessary 
operation,  destroys  or  restricts  free  competition  among  those  en- 
gaged in  interstate  commerce;  in  other  words,  that  to  destroy  or 
restrict  free  competition  in  interstate  commerce  was  to  restrain 
such  commerce.  Nor  can  this  court  say  that  such  a  rule  is  prohibit- 
ed by  the  Constitution,  or  is  not  one  that  Congress  could  appropri- 
ately prescribe  when  exerting  its  power  under  the  commerce  clause 
of  the  Constitution.  Whether  the  free  operation  of  the  normal 
laws  of  competition  is  a  wise  and  wholesome  rule  for  trade  and 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  109 

commerce  is  an  economic  question  which  this  court  need  not  con- 
sider or  determine." 

Mr.  Justice  Brewer,  who  delivered  a  concurring  opinion,  while 
expressing  the  view  that  the  former  cases  were  rightly  decided, 
said  that  they  went  too  far  in  giving  the  reasons  for  the  judgments, 
and  declared  his  view  that  Congress  only  intended  to  reach  and 
destroy  those  contracts  which  were  in  direct  restraint  of  trade, 
unreasonable,  and  against  public  policy.  He  was  nevertheless  em- 
phatic in  condemning  the  combination  effected  by  the  Northern 
Securities  Company  and  the  transfer  of  stocks  to  it,  which  policy 
he  declared  might  be  extended  until  a  single  corporation  with 
stocks  owned  by  three  or  four  parties  would  be  in  practical  control 
of  both  roads ;  or  viewing  the  possibilities  of  combination,  the  con- 
trol of  the  whole  transportation  system  of  the  country.  *  *  *  * 

We  take  it,  therefore,  that  it  may  be  regarded  as  settled,  applying 
the  statute  as  construed  in  the  decisions  of  this  court,  that  a  com- 
bination which  places  railroads  engaged  in  interstate  commerce 
in  such  relation  as  to  create  a  single  dominating  control  in  one 
corporation,  whereby  natural  and  existing  competition  in  interstate 
commerce  is  unduly  restricted  or  suppressed,  is  within  the  con- 
demnation of  the  act.  While  the  law  may  not  be  able  to  enforce 
competition,  it  can  reach  combinations  which  render  competition 
impracticable.  Swift  &  Co.  v.  United  States,  196  U.  S.  375. 

Nor  do  we  think  it  can  make  any  difference  that  instead  of  resort- 
ing to  a  holding  company,  as  was  done  in  the  Northern  Securities 
Case,  the  controlling  interest  in  the  stock  of  one  corporation  is 
transferred  to  the  other.  The  domination  and  control,  and  the 
power  to  suppress  competition,  are  acquired  in  the  one  case  no  less 
than  in  the  other,  and  the  resulting  mischief,  at  which  the  statute 
was  aimed,  is  equally  effective  whichever  form  is  adopted.  The 
statute  in  its  terms  embraces  every  contract  or  combination,  in 
form  of  trust  or  otherwise,  or  conspiracy  in  restraint  of  trade  or 
commerce.  This  court  has  repeatedly  held  this  general  phraseology 
embraces  all  forms  of  combination,  old  and  new.  "In  view  of  the 
many  new  forms  of  contracts  and  combinations,"  said  the  Chief 
Justice  in  the  Standard  Oil  Case  (p.  59),  "which  were  being  evolved 
from  existing  economic  conditions,  it  was  deemed  essential  by  an 
all-embracing  enumeration  to  make  sure  that  no  form  of  contract 
or  combination  by  which  an  undue  restraint  of  interstate  or  foreign 
commerce  was  brought  about  could  save  such  restraint  from  con- 
demnation." A  more  effectual  form  of  combination  to  secure  the 
control  of  a  competing  railroad  than  for  one  road  to  acquire  a  dom- 
inating stock  interest  in  the  other  could  hardly  be  conceived.  If  it 
is  true,  as  contended  by  the  government,  that  a  stock  interest  suffi- 
cient for  the  purpose  was  obtained  in  the  Southern  Pacific  Company, 
with  a  view  to  securing  the  control  of  that  company  and  thus  de- 
stroying or  restricting  competition  with  the  Union  Pacific  in  inter- 
state trade,  the  transaction  was,  in  our  opinion,  within  the  terms  of 
the  statute.  *  *  *  * 

It  is  said,  however,  and  this  was  the  view  of  the  majority  of  the 


no  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

circuit  judges,  that  these  railroads  were  not  competing,  but  were 
engaged  in  a  partnership  in  interstate  carriage  as  connecting  rail- 
roads ;  and  it  was  further  said  that  the  Southern  Pacific,  because 
of  its  control  of  the  line  from  Ogden  to  San  Francisco  and  other 
California  points,  was  the  dominating  partner.  A  large  amount  of 
the  testimony  in  this  voluminous  record  was  given  by  railroad  men 
of  wide  experience,  business  men  and  shippers,  who,  with  practical 
unanimity,  expressed  the  view  that,  prior  to  the  stock  purchase  in 
question,  Union  Pacific  and  Southern  Pacific  systems  were  in  com- 
petition, sharp,  well-defined,  and  vigorous,  for  interstate  trade. 
To  compete  is  to  strive  for  something  which  another  is  actively  seek- 
ing and  wishes  to  gain.  The  Southern  Pacific,  through  its  agents, 
advertisements,  and  literature,  had  undertaken  to  obtain  transporta- 
tion for  its  "Sunset"  or  southerly  route  across  the  continent,  while 
the  Union  Pacific  had  endeavored  in  the  same  territory  to  have 
freight  shipped  by  way  of  its  own  and  connecting  lines,  thus  secur- 
ing for  itself  about  1,000  miles  of  the  haul  to  the  coast. 

To  preserve  from  undue  restraint  the  free  action  of  competition 
in  interstate  commerce  was  the  purpose  which  controlled  Congress 
in  enacting  this  statute,  and  the  courts  should  construe  the  law 
with  a  view  to  effecting  the  object  of  its  enactment. 

Competition  between  two  such  systems  consists  not  only  in  making 
rates,  which,  so  far  as  the  shipper  was  concerned,  the  proof  shows, 
were  by  agreement  fixed  at  the  same  figure  whichever  route  was 
used,  and  then  apportioned  among  the  connecting  carriers  upon  a 
basis  satisfactory  to  themselves,  but  includes  the  character  of  the 
service  rendered,  the  accommodation  of  the  shipper  in  handling 
and  caring  for  freight,  and  the  prompt  recognition  and  adjustment 
of  the  shipper's  claims.  Advantages  in  these  respects  were  the 
subjects  of  representation  and  the  basis  of  solicitation  by  many 
active,  opposing  agencies.  The  maintenance  of  these  by  the  rival 
companies  promoted  their  business  and  increased  their  revenues. 
The  inducement  to  maintain  these  points  of  advantage — low  rates, 
superiority  of  service  and  accommodation — did  not  remain  the  same 
in  the  hands  of  a  single  dominating  and  common  ownership  as  it 
was  when  they  were  the  subjects  of  active  promotion  by  competing 
owners  whose  success  depended  upon  their  accomplishment. 

The  consolidation  of  two  great  competing  systems  of  railroad 
engaged  in  interstate  commerce  by  a  transfer  to  one  of  a  dominating 
stock  interest  in  the  other  creates  a  combination  which  restrains 
interstate  commerce  within  the  meaning  of  the  statute,  because,  in 
destroying  or  greatly  abridging  the  free  operation  of  competition 
theretofore  existing,  it  tends  to  higher  rates  (United  States  v.  Joint 
Traffic  Asso.  171  U.  S.  577).  It  directly  tends  to  less  activity  in 
furnishing  the  public  with  prompt  and  efficient  service  in  carrying 
and  handling  freight  and  in  carrying  passengers,  and  in  attention 
to  and  prompt  adjustment  of  the  demands  of  patrons  for  losses, 
and  in  these  respects  puts  interstate  commerce  under  restraint. 
Nor  does  it  make  any  difference  that  rates  for  the  time  being  may 
not  be  raised  and  much  money  be  spent  in  improvements  after  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  1 1 1 

combination  is  effected.  It  is  the  scope  of  such  combinations  and 
their  power  to  suppress  or  stifle  competition  or  create  monopoly 
which  determines  the  applicability  of  the  act.  Pearsall  v.  Great 
Northern  R.  Co.  161  U.  S.  646,  676;  United  States  v.  Joint  Traffic 
Asso.  supra.  *  *  *  * 

It  is  further  contended  that  the  real  purpose  in  acquiring  the  stock 
was  not  to  obtain  the  control  of  the  Southern  Pacific  as  a  system, 
but  to  secure  the  California  connection  via  Ogden,  and  to  avoid 
the  situation  which  has  been  termed  the  "bottling  up"  of  the  Union 
Pacific  at  that  point.  That  process,  we  have  undertaken  to  show, 
might  have  been  detrimental  to  the  Southern  Pacific  business  in 
California,  as  it  is  apparent  that  much  of  it  would  not  have  gone 
over  the  "Sunset"  route  of  the  Southern  Pacific.  It  may  be  con- 
ceded, as  is  undoubtedly  the  fact,  that  the  connection  at  Ogden  was 
a  valuable  one,  the  one  practically  and  largely,  if  not  exclusively, 
used  in  the  transportation  of  freight  to  and  from  the  State  of  Cali- 
fornia; but  this  case  is  not  to  be  decided  upon  the  theory  that  only 
so  much  of  the  Southern  Pacific  system  as  operates  between  Ogden 
and  San  Francisco  has  been  acquired.  Conceding  for  this  purpose 
that  it  might  have  been  legitimate,  had  it  been  practicable,  to  acquire 
the  California  connection  at  Ogden  over  the  old  Central  Pacific 
line,  we  must  consider  what  was  in  fact  done ;  and  that  was  the 
purchase  of  the  controlling  interest  in  the  entire  Southern  Pacific 
system,  consisting  of  ocean  and  river  lines  with  a  mileage  of  about 
3,500  miles,  and  railroad  lines  aggregating  over  8,000  miles,  together 
forming  a  transportation  system  from  New  York  and  other  Atlantic 
ports  to  San  Francisco  and  Portland  and  other  Pacific  Coast  points, 
with  various  branches  and  connections,  besides  a  steamship  line 
from  San  Francisco  to  Panama  and  from  San  Francisco  to  the 
Orient,  and  a  half  interest  in  another  line  between  the  two  latter 
points.  The  purchase  may  be  judged  by  what  it  in  fact  accom- 
plished, and  the  natural  and  probable  consequences  of  that  which 
was  done.  Because  it  would  have  been  lawful  to  gain,  by  purchase 
or  otherwise,  an  entrance  into  California  over  the  old  Central 
Pacific,  does  not  render  it  legal  to  acquire  the  entire  system,  largely 
engaged  in  interstate  commerce  in  competition  with  the  purchasing 
road.  *  *  *  * 

Reaching  the  conclusion  that  the  Union  Pacific  thus  obtained  the 
control  of  a  competing  railroad  system  and  thereby  effected  a  com- 
bination in  restraint  of  trade,  within  the  meaning  of  the  Sherman 
Act,  the  question  remains,  What  should  be  the  relief  in  such  cir- 
cumstances ?  The  remedies  provided  in  the  statute,  generally  speak- 
ing, were  said  by  this  court  in  the  Standard  Oil  Case,  supra,  to  be 
twofold  in  character  (p.  78)  : 

"1st.  To  forbid  the  doing  in  the  future  of  acts  like  those  which 
we  have  found  to  have  been  done  in  the  past  which  would  be  viola- 
tive  of  the  statute.  2d.  The  exertion  of  such  measure  of  relief 
as  will  effectually  dissolve  the  combination  found  to  exist  in  violation 
of  the  statute,  and  thus  neutralize  the  extension  and  continually 
operating  force  which  the  possession  of  the  power  unlawfully  ob- 


ii2  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

tained  has  brought  and  will  continue  to  bring  about."  *  *  *  * 
As  to  the  suggestion  made  at  the  oral  argument  by  the  Attorney 
General,  in  response  to  a  query  from  the  court  as  to  the  nature  of 
the  decree,  that  one  might  be  entered  which,  while  destroying  the 
unlawful  combination  in  so  far  as  the  Union  Pacific  secured  control 
of  the  competing  line  of  road  extending  from  New  Orleans  and 
Galveston  to  San  Francisco  and  Portland,  would  permit  the  Union 
Pacific  to  retain  the  Central  Pacific  connection  from  Ogden  to  San 
Francisco,  and  thereby  to  control  that  line  to  the  coast,  thus  effect- 
ing such  a  continuity  of  the  Union  Pacific  and  Central  Pacific  from 
the  Missouri  River  to  San  Francisco  as  was  contemplated  by  the 
acts  of  Congress  under  which  they  were  constructed,  it  should  be 
said  that  nothing  herein  shall  be  considered  as  preventing  the  gov- 
ernment or  any  party  in  interest,  if  so  desiring,  from  presenting  to 
the  district  court  a  plan  for  accomplishing  this  result,  or  as  pre- 
venting it  from  adopting  and  giving  effect  to  any  such  plan  so  pre- 
sented. 

Any  plan  or  plans  shall  be  presented  to  the  district  court  within 
three  months  from  the  receipt  of  the  mandate  of  this  court ;  failing 
which,  or,  upon  the  rejection  by  the  court  of  plans  submitted  within 
such  time,  the  court  shall  proceed  by  receivership  and  sale,  if  neces- 
sary, to  dispose  of  such  stock  in  such  wise  as  to  dissolve  such  unlaw- 
ful combination. 

Decree  reversed. 


Note. — On  January  6,  1913,  the  Supreme  Court  passed  upon  a  plan  offered 
by  the  Union  Pacific  Railroad  Company  of  complying  with  the  court's 
decree  by  selling  or  distributing  as  a  stock  dividend  to  its  own  stockholders 
the  shares  of  stock  of  the  Southern  Pacific  Company  held  by  it  as  de- 
scribed in  the  preceding  case.  The  court  rejected  the  plan,  holding  that  the 
stockholders  might  delegate  to  their  directors  the  same  authority  and  con- 
trol as  when  the  company  held  the  stock,  and  said:  "We  are  of  opinion, 
however,  and  now  hold,  that  the  proposed  plan  of  disposition  of  the  entire 
stock  holding  of  the  Union  Pacific  Company  in  the  Southern  Pacific  Company 
by  transfer  to  the  stockholders  of  the  Union  Pacific  Company  will  not  so 
effectually  end  the  combination  as  to  comply  with  the  decree  heretofore 
ordered  by  this  court  to  be  entered."  Subsequently  the  Union  Pacific  dis- 
posed of  the  stock  by  exchanging  a  part  thereof  with  the  Pennsylvania 
Railroad  Company  for  Baltimore  and  Ohio  Railroad  Company  stock  held  by 
the  latter,  and  the  balance  of  Southern  Pacific  stock  was  sold  through  an 

underwriting   syndicate. 

i 

THE  STANDARD  OIL  COMPANY  OF  NEW  JERSEY,  ET 
.   AL.,  APPELLANTS,  vs.  THE  UNITED  STATES. 
SUPREME  COURT  OF  UNITED  STATES. 
221  U.  S.,  1.     (May,  1911.) 

This  proceeding  was  instituted  by  the  United  States  Government 
against  the  Standard  Oil  Corporations  in  the  Circuit  Court  of  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  113 

United  States  for  the  Eastern  District  of  Missouri.  The  object  of 
the  action  was  to  dissolve  the  Standard  Oil  Company  of  New 
Jersey,  which  was  a  holding  company  for  all  other  companies,  and 
which  the  government  attacked  as  existing  in  violation  of  the 
Sherman  Anti-Trust  Act  of  July  2nd,  1890.  Corporations  known 
as  the  Standard  Oil  Company  of  New  Jersey,  Standard  Oil  Com- 
pany of  California,  Standard  Oil  Company  of  Indiana,  Standard 
Oil  Company  of  Iowa,  Standard  Oil  Company  of  Kansas,  Standard 
Oil  Company  of  Kentucky,  Standard  Oil  Company  of  Nebraska, 
Standard  Oil  Company  of  New  York,  Standard  Oil  Company  of 
Ohio,  and  sixty-two  other  corporations  and  partnerships,  John 
D.  Rockefeller,  William  Rockefeller  and  five  individuals,  were 
named  as  defendants.  The  government  charged  that  these  various 
parties  were  engaged  in  conspiring  "to  restrain  the  trade  and  com- 
merce in  petroleum,  commonly  called  'crude  oil,'  in  refined  oil,  and 
in  other  products  of  petroleum,  among  the  several  States  and  Terri- 
tories of  the  United  States  and  the  District  of  Columbia,  and  with 
foreign  nations,  and  to  monopolize  the  said  commerce."  The  con- 
spiracy was  alleged  to  have  been  formed  about  the  year  1870  by 
John  D.  Rockefeller,  William  Rockefeller  and  Henry  M.  Flagler. 
The  detailed  facts  concerning  the  conspiracy  were  divided  into  three 
periods:  The  first  from  1870  to  1882;  the  second  from  1882  to 
1899;  the  third  period  from  1899  to  the  time  of  the  institution  of 
the  proceeding. 

As  to  the  First  Period  (1870  to  1882),  it  was  claimed  that  John 
D.  and  William  Rockefeller  and  several  other  individual  defend- 
ants who  prior  to  1870  composed  three  separate  partnerships,  or- 
ganized in  the  year  1870  a  corporation  known  as  the  Standard  Oil 
Company  of  Ohio  and  transferred  to  that  company  the  business  of 
the  three  partnerships.  The  other  individual  defendants  soon  after- 
wards became  participants  in  the  combination  and  transferred  prop- 
erty to  the  corporation  in  return  for  an  interest  in  the  Standard 
Oil  Company  of  Ohio.  By  this  means  by  the  year  1872  the  com- 
bination had  acquired  all  but  three  or  four  of  the  thirty-five  or  forty 
oil  refineries  located  in  Cleveland,  Ohio.  That  by  the  power  thus 
obtained,  the  combination  secured  from  the  railroads  large  prefer- 
ential rates  and  rebates  over  their  competitors,  so  that  such  com- 
petitors were  forced  either  to  become  members  of  the  combination 
or  were  driven  out  of  business.  From  time  to  time,  the  combination 
acquired  a  large  number  of  refineries  of  crude  petroleum  situated  in 
New  York,  Pennsylvania,  Ohio  and  elsewhere,  and  the  control  of  the 
pipe  lines  for  transporting  oil  from  the  oil  fields  to  the  refineries 
in  Cleveland,  Pittsburg,  Titusville,  Philadelphia,  New  York  and 
New  Jersey.  Some  of  the  properties  acquired  were  put  in  the 
name  of  the  Standard  Oil' Company  of  Ohio,  some  in  the  name  of 
the  corporations  and  partnership  affiliated  therewith,  and  others 
were  left  in  the  name  of  the  original  owners,  who  had  become  stock- 
holders in  the  Standard  Oil  Company  and  thus  members  of  the 
combination.  Therefore,  during  the  period  named,  the  combination 


ii4  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

had  obtained  a  complete  mastery  over  the  oil  industry,  controlling 
90  per  cent,  of  the  business  of  producing,  shipping,  refining,  and 
selling  petroleum  and  its  products,  and  was  thus  enabled  to  fix  the 
price  of  crude  and  refined  petroleum,  and  to  restrain  and  monopolize 
all  interstate  commerce  in  those  products. 

As  to  the  Second  Period  (1882  to  1899),  it  was  asserted  the 
various  defendants  entered  into  a  contract  and  trust  agreement, 
by  which  various  independent  firms,  corporations,  partnerships,  and 
individuals  engaged  in  the  oil  business,  turned  over  the  management 
of  their  business  to  nine  trustees,  composed  chiefly  of  the  individual 
defendants.  The  trust  agreement  made  provision  for  the  method 
of  controlling  and  managing  the  various  properties  and  business. 
It  provided  for  the  issue  of  certificates  to  represent  the  interest  of 
the  parties.  Subsequently  the  trustees  organized  the  Standard  Oil 
Company  of  New  York  with  a  capital  stock  of  $3,000,000,  and  the 
Standard  Oil  Company  of  New  Jersey  having  a  capital  stock  of 
$5,000,000,  subsequently  increased  to  $10,000,000. 

In  the  Third  Period  (1899  to  date  of  proceeding),  pursuant  to 
the  conspiracy,  the  individual  defendants  operated  through  the 
Standard  Oil  Company  of  New  Jersey  as  a  holding  company,  which 
company  obtained  and  acquired  the  majority  of  the  stock  of  the 
various  corporations  engaged  in  the  oil  business  among  the  various 
States.  The  trust  agreement  mentioned  in  the  second  period  of 
the  conspiracy  came  to  an  end  and  the  stock  of  the  various  com- 
panies controlled  under  its  provisions  was  transferred  to  the  Stand- 
ard Oil  Company  of  New  Jersey,  whose  capital  was  increased  from 
$10,000,000  to  $110,000,000.  In  addition  to  these  facts  showing 
how  the  Standard  Oil  Trust  had  monopolized  and  restrained  inter- 
state commerce  in  petroleum  and  its  products  from  1882  to  1899, 
and  the  Standard  Oil  Company  of  New  Jersey  had  followed  the 
same  course  since  1899,  the  government  set  forth  that  the  various 
means  by  which  competition  was  further  destroyed  were  as  follows, 
—by  rebates,  preferences  and  other  discriminatory  practices  in  favor 
of  the  combination  by  railroad  companies ;  by  restraint  and  monopo- 
lization by  control  of  pipe  lines, — by  contracts  with  competitors  in 
restraint  of  trade, — by  unfair  methods  of  competition,  such  as  local 
price  cutting  at  the  points  where  necessary  to  suppress  competition, 
— by  espionage  of  the  business  of  competitors, — by  the  operation 
of  bogus  independent  companies, — by  the  payment  of  rebates  on 
oil, — and  by  the  division  of  the  United  States  into  districts  and 
limiting  the  operations  of  the  various  companies  to  particular  dis- 
tricts. 

The  decree  of  the  Circuit  Court  was  in  favor  of  the  government, 
and  an  order  directing  the  dissolution  of  the  Standard  Oil  Com- 
pany of  New  Jersey  and  restraining  all  the  parties  defendant  from 
such  acts  of  conspiracy  in  restraint  of  trade  was  made.  From  this 
decree  an  appeal  was  carried  to  the  Supreme  Court  of  the  United 
States. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  115 

MR.  CHIEF  JUSTICE  WHITE  (after  stating  the  above  facts)  de- 
livered the  opinion  of  the  court. 

Duly  appreciating  the  situation  just  stated,  it  is  certain  that  only 
one  point  of  concord  between  the  parties  is  discernable,  which  is, 
that  the  controversy  in  every  aspect  is  controlled  by  a  correct  con- 
ception of  the  meaning  of  the  first  and  second  sections  of  the  Antiv- 
Trust  Act.  We  shall  therefore — departing  from  what  otherwise 
would  be  the  natural  order  of  analysis — make  this  one  point  of  har- 
mony the  initial  basis  of  our  examination  of  the  contentions,  rely- 
ing upon  the  conception  that  by  doing  so  some  harmonious  resonance 
may  result  adequate  to  dominate  and  control  the  discord  with  which 
the  case  abounds.  That  is  to  say,  we  shall  first  come  to  consider* 
the  meaning  of  the  first  and  second  sections  of  the  Anti-Trust  Act 
by  the  text,  and  after  discerning  what  by  that  process  appears  to 
be  its  true  meaning,  we  shall  proceed  to  consider  the  respective  con- 
tentions of  the  parties  concerning  the  act,  the  strength  or  weakness 
of  those  contentions,  as  well  as  the  accuracy  of  the  meaning  of 
the  act  as  deduced  from  the  text  in  the  light  of  the  prior  decisions 
of  this  court  concerning  it.  When  we  have  done  this  we  shall  then 
approach  the  facts. 

Following  this  course,  we  shall  make  our  investigation  under  four 
separate  headings:  First.  The  text  of  the  1st  and  2nd  sections 
of  the  act,  originally  considered,  and  its  meaning  in  the  light  of  the 
common  law  and  the  law  of  this  country  at  the  time  of  its  adoption. 
Second.  The  contentions  of  the  parties  concerning  the  act,  and 
the  scope  and  effect  of  the  decisions  of  this  court  upon  which  they 
rely.  Third.  The  application  of  the  statute  to  the  facts;  and, 
Fourth.  The  remedy,  if  any,  to  be  afforded  as  the  result  of  such 
application. 

First.     The  text  of  the  act  and  its  meaning. 

We  quote  the  text  of  the  first  and  second  sections  of  the  act,  as 
follows : 

"SECTION  1.  Every  contract,  combination  in  the  form  of  trust 
or  otherwise,  or  conspiracy,  in  restraint  of  trade  or  commerce, 
among  the  several  States,  or  with  foreign  nations,  is  hereby  de- 
clared to  be  illegal.  Every  person  who  shall  make  any  such  con- 
tract, or  engage  in  any  such  combination  or  conspiracy,  shall  be 
deemed  guilty  of  a  misdemeanor,  and,  on  conviction  thereof,  shall 
be  punished  by  a  fine  not  exceeding  $5,000,  or  by  imprisonment 
not  exceeding  one  year,  or  both  said  punishments,  in  the  discretion 
of  the  court. 

"SEC.  2.  Every  person  who  shall  monopolize,  or  attempt  to 
monopolize,  or  combine  or  conspire  with  any  other  person  or  per- 
sons to  monopolize,  any  part  of  the  trade  or  commerce  among  the 
several  States  or  with  foreign  nations,  shall  be  deemed  guilty  of 
a  misdemeanor,  and  on  conviction  thereof,  shall  be  punished  by  a 
fine  not  exceeding  $5,000,  or  by  imprisonment  not  exceeding  one 
year,  or  by  both  said  punishments,  in  the  discretion  of  the  court." 


n6  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

There  can  be  no  doubt  that  the  sole  subject  with  which  the  first 
section  deals  is  restraint  of  trade  as  therein  contemplated,  and  that 
the  attempt  to  monopolize  and  monopolization  is  the  subject  with 
which  the  second  section  is  concerned.  It  is  certain  that  those 
terms,  at  least  in  their  rudimentary  meaning,  took  their  origin 
in  the  common  law,  and  were  also  familiar  in  the  law  of  this 
country  prior  to  and  at  the  time  of  the  adoption  of  the  act  in 
question. 

It  is  certain  that  at  a  very  remote  period  the  words  contract  in 
restraint  of  trade  in  England  came  to  refer  to  some  voluntary 
restraint  put  in  contract  by  an  individual  on  his  right  to  carry  on 
his  trade  or  calling.  Originally  all  such  contracts  were  considered 
to  be  illegal,  because  it  was  deemed  they  were  injurious  to  the 
public,  as  well  as  to  the  individuals  who  made  them.  In  the  interest 
of  the  freedom  of  individuals  to  contract  this  doctrine  was  modified 
so  that  it  was  only  when  a  restraint  by  contract  was  so  general  as 
to  be  coterminus  with  the  kingdom  that  it  was  treated  as  void. 
That  is  to  say,  if  the  restraint  was  partial  in  its  operation  and  was  • 
otherwise  reasonable  the  contract  was  held  to  be  valid. 

Monopolies  were  defined  by  Lord  Coke  as  follows: 
"A  monopoly  is  an  institution,  or  allowance  by  the  king  by  his 
grant,  commission,  or  otherwise  to  any  person  or  persons,  bodies 
politic  or  corporate,  of  or  for  the  sole  buying,  selling,  making, 
working,  or  using  of  anything,  whereby  any  person  or  persons, 
bodies  politic  or  corporate,  are  sought  to  be  restrained  of  any  free- 
dom or  liberty  that  they  had  before,  or  hindered  in  their  lawful 
trade.  (3  Inst.  1881.)"  *  *  *  * 

The  frequent  granting  of  monopolies  and  the  struggle  which  led 
to  a  denial  of  the  power  to  create  them,  that  is  to  say,  to  the 
establishment  that  they  were  incompatible  with  the  English  con- 
stitution is  known  to  all  and  need  not  be  reviewed.  The  evils  which 
led  to  the  public  outcry  against  monopolies  and  to  the  final  denial 
of  the  power  to  make  them  may  be  thus  summarily  stated:  1.  The 
power  which  the  monopoly  gave  to  the  one  who  enjoyed  it  to  fix 
the  price  and  thereby  injure  the  public;  2.  The  power  which  it 
engendered  of  enabling  a  limitation  on  production;  and,  3.  The 
danger  of  deterioration  in  quality  of  the  monopolized  article  which 
it  was  deemed  was  the  inevitable  resultant  of  the  monopolistic  con- 
trol over  its  production  and  sale.  As  monopoly  as  thus  conceived 
embraced  only  a  consequence  arising  from  an  exertion  of  sovereign 
power,  no  express  restrictions  or  prohibitions  obtained  against  the 
creation  by  an  individual  of  a  monopoly  as  such.  But  as  it  was 
considered,  at  least  so  far  as  the  necessaries  of  life  were  concerned, 
that  individuals  by  the  abuse  of  their  right  to  contract  might  be 
able  to  usurp  the  power  arbitrarily  to  enhance  prices,  (one  of  the 
wrongs  arising  from  monopoly),  it  came  to  be  that  laws  were  passed 
relating  to  offenses  such  as  forestalling,  regrating  and  engrossing 
by  which  prohibitions  were  placed  upon  the  power  of  individuals 
to  deal  under  such  circumstances  and  conditions  as,  according  to 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  117 

the  conception  of  the  times,  created  a  presumption  that  the  dealings 
were  not  simply  the  honest  exertion  of  one's  right  to  contract  for 
his  own  benefit  unaccompanied  by  a  wrongful  motive  to  injure 
others,  but  were  the  consequence  of  a  contract  or  course  of  dealing 
of  such  a  character  as  to  give  rise  to  the  presumption  of  an  intent 
to  injure  others  through  the  means,  for  instance,  of  a  monopolistic 
increase  of  prices.  *  *  *  * 

Generalizing  these  considerations,  the  situation  is  this :  1.  That 
by  the  common  law  monopolies  were  unlawful  because  of  their  re- 
striction upon  individual  freedom  of  contract  and  their  injury  to 
the  public.  2.  That  as  to  necessaries  of  life  the  freedom  of  the 
individual  to  deal  was  restricted  where  the  nature  and  character 
of  the  dealing  was  such  as  to  engender  the  presumption  of  intent 
to  bring  about  at  least  one  of  the  injuries  which  it  was  deemed 
would  result  from  monopoly,  that  is  an  undue  enhancement  of 
price.  3.  That  to  protect  the  freedom  of  contract  of  the  individual 
not  only  in  his  own  interest,  but  principally  in  the  interest  of  the 
common  weal,  a  contract  of  an  individual  by  which  he  put  an  un- 
reasonable restraint  upon  himself  as  to  carrying  on  his  trade  or 
business  was  void.  And  that  at  common  law  the  evils  consequent 
upon  engrossing,  etc.,  caused  those  things  to  be  treated  as  coming 
within  monopoly  and  sometimes  to  be  called  monopoly  and  the 
same  considerations  caused  monopoly  because  of  its  operation  and 
effect,  to  be  brought  within  and  spoken  of  generally  as  impeding  the 
due  course  of  or  being  in  restraint  of  trade. 

Let  us  consider  the  language  of  the  first  and  second  sections, 
guided  by  the  principle  that  where  words  are  employed  in  a  statute 
which  had  at  the  time  a  well  known  meaning  at  common  law  or  in 
the  law  of  this  country,  they  are  presumed  to  have  been  used  in 
that  sense  unless  the  context  compels  to  the  contrary.  As  to  the 
first  section,  the  words  to  be  interpreted  are:  "Every  contract, 
combination  in  the  form  of  trust  or  otherwise  or  conspiracy  in 
restraint  of  trade  or  commerce  *  *  *  *  is  hereby  declared  to 
be  illegal." 

In  view  of  the  common  law  and  the  law  in  this  country  as  to 
restraint  of  trade,  which  we  have  reviewed,  and  the  illuminating 
effect  which  that  history  must  have  under  the  rule  to  which  we 
have  referred,  we  think  it  results : 

a.  That  the  context  manifests  that  the  statute  was  drawn  in  the 
light  of  the  existing  practical  conception  of  the  law  of  restraint  of 
trade,  because  it  groups  as  within  that  class,  not  only  contracts 
which  were  in  restraint  of  trade  in  the  subjective  sense,  but  all  con- 
tracts or  acts  which  theoretically  were  attempts  to  monopolize,  yet 
which  in  practice  had  come  to  be  considered  as  in  restraint  of  trade 
in  a  broad  sense. 

&.  That  in  view  of  the  many  new  forms  of  contracts  and  com- 
binations which  were  being  evolved  from  existing  economic  condi- 
tions, it  was  deemed  essential  by  an  all-embracing  enumeration 
to  make  sure  that  no  form  of  contract  or  combination  by  which 


n8  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

an  undue  restraint  of  interstate  or  foreign  commerce  was  brought 
about  could  save  such  restraint  from  condemnation.  The  statute 
under  this  view  evidenced  the  intent  not  to  restrain  the  right  to 
make  and  enforce  contracts,  whether  resulting  from  combination 
or  otherwise,  which  did  not  unduly  restrain  interstate  or  foreign 
commerce,  but  to  protect  that  commerce  from  being  restrained  by 
methods,  whether  old  or  new,  which  would  constitute  an  interfer- 
ence that  is  an  undue  restraint. 

c.  And  as  the  contracts  or  acts  embraced  in  the  provision  were 
not  expressly  defined,  since  the  enumeration  addressed  itself  simply 
to  classes  of  acts,  those  classes  being  broad  enough  to  embrace 
every  conceivable  contract  or  combination  which  could  be  made 
concerning  trade  or  commerce  or  the  subjects  of  such  commerce, 
and  thus  caused  any  act  done  by  any  of  the  enumerated  methods 
anywhere  in  the  whole  field  of  human  activity  to  be  illegal  if  in 
restraint  of  trade,  it  inevitably  follows  that  the  provision  necessarily 
called  for  the  exercise  of  judgment  which  required  that  some 
standard  should  be  resorted  to  for  the  purpose  of  determining 
whether  the  prohibitions  contained  in  the  statute  had  or  had  not 
in  any  given  case  been  violated.  Thus  not  specifying  but  indubit- 
ably contemplating  and  requiring  a  standard,  it  follows  that  it  was 
intended  that  the  standard  of  reason  which  had  been  applied  at 
the  common  law  and  in  this  country  in  dealing  with  subjects  of  the 
character  embraced  by  the  statute,  was  intended  to  be  the  measure 
used  for  the  purpose  of  determining  whether  in  a  given  case  a 
particular  act  had  or  had  not  brought  about  the  wrong  against 
which  the  statute  provided. 

And  a  consideration  of  the  text  of  the  second  section  serves  to 
establish  that  it  was  intended  to  supplement  the  first  and  to  make 
sure  that  by  no  possible  guise  could  the  public  policy  embodied  in 
the  first  section  be  frustrated  or  evaded.  The  prohibition  of  the 
second  embraces  "every  person  who  shall  monopolize  or  attempt 
to  monopolize  or  combine  or  conspire  with  any  other  person  or 
persons  to  monopolize  any  part  of  the  trade  or  commerce  among 
the  several  States  or  with  foreign  nations."  By  reference  to  the 
terms  of  Section  8  it  is  certain  that  the  word  "person"  clearly 
implies  a  corporation  as  well  as  an  individual. 

And  it  is  worthy  of  observation,  as  we  have  previously  remarked 
concerning  the  common  law,  that  although  the  statute  by  the  com- 
prehensiveness of  the  enumerations  embodied  in  both  the  first  and 
second  sections  makes  it  certain  that  its  purpose  was  to  prevent 
undue  restraints  of  every  kind  or  nature,  nevertheless  by  the  omis- 
sion of  any  direct  prohibition  against  monopoly  in  the  concrete 
it  indicates  a  consciousness  that  the  freedom  of  the  individual  right 
to  contract  when  not  unduly  or  improperly  exercised  was  the  most 
efficient  means  for  the  prevention  of  monopoly,  since  the  operation 
of  the  centrifugal  and  centripedal  forces  resulting  from  the  right 
to  freely  contract  was  the  means  by  which  monopoly  would  be  in- 
evitably prevented  if  no  extraneous  or  sovereign  power  imposed  it 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  119 

and  no  right  to  make  unlawful  contracts  having  a  monopolistic  ten- 
dency were  permitted.  In  other  words,  that  freedom  to  contract 
was  the  essence  of  freedom  from  undue  restraint  on  the  right  to 
contract. 

Second.  The  contentions  of  the  parties  as  to  the  meaning  of  the 
statute  and  the  decisions  of  this  court  relied  upon  concerning  those 
contentions. 

In  substance,  the  propositions  urged  by  the  Government  are  re- 
ducible to  this:  That  the  language  of  the  statute  embraces  every 
contract,  combination,  etc.,  in  restraint  of  trade,  and  hence  its  text 
leaves  no  room  for  the  exercise  of  judgment,  but  simply  imposes 
the  plain  duty  of  applying  its  prohibitions  to  every  case  within  its 
literal  language.  The  error  involved  lies  in  assuming  the  matter 
to  be  decided. 

It  is  said  the  previous  decisions  of  this  court  have  given  to  the 
statute  a  meaning  which  expressly  excludes  the  construction  which 
must  result  from  the  reasoning  stated.  The  cases  are  United  States 
v.  Freight  Association,  166  U.  S.  290,  and  United  States  v.  Joint 
Traffic  Association,  171  U.  S.  505.  Both  the  cases  involved  the 
legality  of  combinations  or  associations  of  railroads  engaged  in 
interstate  commerce  for  the  purpose  of  controlling  the  conduct  of 
the  parties  to  the  association  or  combination  in  many  particulars. 
The  association  or  combination  was  assailed  in  each  case  as  being; 
in  violation  of  the  statute.  It  was  held  that  they  were.  It  is  un- 
doubted that  in  the  opinion  in  each  case  general  language  was  made 
use  of,  when  separated  from  its  context,  would  justify  the  conclu- 
sion that  it  was  decided  that  reason  could  not  be  resorted  to  for 
the  purpose  of  determining  whether  the  acts  complained  of  were 
within  the  statute. 

And  in  order,  not  in  the  slightest  degree  to  be  wanting  in  frank- 
ness, we  say  that  in  so  far,  however,  as  by  separating  the  general 
language  used  in  the  opinions  in  the  Freight  Association  and  Joint 
Traffic  cases  from  the  context  and  the  subject  and  parties  with 
which  the  cases  were  concerned,  it  may  be  conceived  that  the  lan- 
guage referred  to  conflicts  with  the  construction  which  we  give  the 
statute,  they  are  necessarily  now  limited  and  qualified.  We  see 
no  possible  escape  from  this  conclusion  if  we  are  to  adhere  to  the 
many  cases  decided  in  this  court  in  which  the  Anti-Trust  law  has 
been  applied  and  enforced  and  if  the  duty  to  apply  and  enforce 
that  law  in  the  future  is  to  continue  to  exist.  The  first  is  true,  be-> 
cause  the  construction  which  we  now  give  the  statute  does  not  in 
the  slightest  degree  conflict  with  a  single  previous  case  decided 
concerning  the  Anti-Trust  law,  aside  from  the  contention  as  to  the 
Freight  Association  and  Joint  Traffic  cases,  and  because  every  one 
of  those  cases  applied  the  rule  of  reason  for  the  purpose  of  deter- 
mining whether  the  subject  before  the  court  was  within  the  statute. 
The  second  is  also  true,  since,  as  we  have  already  pointed  out,  un- 
aided by  the  light  of  reason  it  is  impossible  to  understand  how 


tO 


120  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

the  statute  may  in  the  future  be  enforced  and  the  public  policy  which 
it  establishes  be  made  efficacious. 

We  come  then  to  the  third  proposition  requiring  consideration, 
viz. : 

Third.     The  facts  and  the  application  of  the  statute  to  them. 
Beyond  dispute  the  proofs  establish  substantially  as  alleged  in 
the  bill  the  following  facts : 

1.  The  creation  of  the  Standard  Oil  Company  of  Ohio; 

2.  The  organization  of  the  Standard  Oil  Trust  of  1882,  and  also 
a  previous  one  of  1879,  not  referred  to  in  the  bill,  and  the  proceed- 
ings in  the  Supreme  Court  of  Ohio,  culminating  in  a  decree  based 
upon  the  rinding  that  the  company  was  unlawfully  a  party  to  that 
trust;  the  transfer  by  the  trustees  of  stocks  in  certain  of  the  com- 
panies ;  the  contempt  proceedings ;  and,  finally,  the  increase  of  the 
capital  of  the  Standard  Oil  Company  of  New  Jersey  and  the  ac- 
quisition by  that  company  of  the  shares  of  the  stock  of  the  other 
corporations  in  exchange  for  its  certificates. 

The  vast  amount  of  property  and  the  possibilities  of  far  reaching 
control  which  resulted  from  the  facts  stated  are  shown  by  the 
statement  which  we  have  previously  annexed  concerning  the  par- 
ties to  the  trust  agreement  of  1882,  and  the  corporations  whose 
stock  was  held  by  the  trustees  under  the  trust  and  which  came 
therefore  to  be  held  by  the  New  Jersey  corporation.  But  these 
statements  do  not  with  accuracy  convey  an  appreciation  of  the  situ- 
ation as  it  existed  at  the  time  of  the  entry  of  the  decree  below, 
since  during  the  more  than  ten  years  which  elapsed  between  the 
acquiring  by  the  New7  Jersey  corporation  of  the  stock  and  other 
property  which  was  formerly  held  by  the  trustees  under  the  trust 
agreement,  the  situation  of  course  has  somewhat  changed,  a  change 
which  when  analyzed  in  the  light  of  the  proof,  we  think,  establishes 
that  the  result  of  enlarging  the  capital  stock  of  the  New  Jersey 
company  and  giving  it  the  vast  power  to  which  we  have  referred 
produced  its  normal  consequence,  that  is,  it  gave  to  the  corpora- 
tion, despite  enormous  dividends  and  despite  the  dropping  out  of 
certain  corporations  enumerated  in  the  decree  of  the  court  below, 
an  enlarged  and  more  perfect  sway  and  control  over  the  trade  and 
commerce  in  petroleum  and  its  products. 

Giving  to  the  facts  just  stated,  the  weight  which  it  was  deemed 
they  were  entitled  to,  in  the  light  afforded  by  the  proof  of  other 
cognate  facts  and  circumstances,  the  court  below  held  that  the  acts 
and  dealings  established  by  the  proof  operated  to  destroy  the  "po- 
tentiality of  competition"  which  otherwise  would  have  existed  to 
such  an  extent  as  to  cause  the  transfers  of  stock  which  were  made 
to  the  New  Jersey  corporation  and  the  control  which  resulted  over 
the  many  and  various  subsidiary  corporations  to  be  a  combination 
or  conspiracy  in  restraint  of  trade  in  violation  of  the  first  section 
of  the  act,  but  also  to  be  an  attempt  to  monopolize  and  a  monopoli- 
zation bringing  about  a  perennial  violation  of  the  second  section. 

We  see  no  cause  to  doubt  the  correctness  of  these  conclusions, 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  121 

considering  the  subject  from  every  aspect,  that  is,  both  in  view 
of  the  facts  established  by  the  record  and  the  necessary  operation 
and  effect  of  the  law  as  we  have  construed  it  upon  the  inferences 
deducible  from  the  facts. 

The  inference  that  no  attempt  to  monopolize  could  have  been 
intended,  and  that  no  monopolization  resulted  from  the  acts  com- 
plained of,  since  it  is  established  that  a  very  small  percentage  of 
the  crude  oil  produced  was  controlled  by  the  combination,  is  unwar- 
ranted. As  substantial  power  over  the  crude  product  was  the  in- 
evitable result  of  the  absolute  control  which  existed  over  the  re- 
fined product,  the  monopolization  of  the  one  carried  with  it  the 
power  to  control  the  other,  and  if  the  inference  which  this  situa- 
tion suggests  were  developed,  which  we  deem  it  unnecessary  to  do, 
they  might  well  serve  to  add  additional  cogency  to  the  presumption 
of  intent  to  monopolize  which  we  have  found  arises  from  the  un- 
questioned proof  on  other  subjects. 

We  are  thus  brought  to  the  last  subject  which  we  are  called  upon 
to  consider,  viz.  : 

Fourth.     The  remedy  to  be  administered. 

i 

It  may  be  conceded  that  ordinarily  where  it  was  found  that  acts 
had  been  done  in  violation  of  the  statute,  adequate  measure  of 
relief  would  result  from  restraining  the  doing  of  such  acts  in  the 
future.  Swift  v.  United  States,  196  U.  S.  375.  But  in  a  case  like 
this  where  the  condition  which  has  been  brought  about  in  violation 
of  the  statute,  in  and  of  itself,  is  not  only  a  continued  attempt  to 
monopolize,  but  also  a  monopolization,  the  duty  to  enforce  the 
statute  requires  the  application  of  broader  and  more  controlling 
remedies.  As  penalties  which  are  not  authorized  by  law  may  not 
be  inflicted  by  judicial  authority,  it  follows  that  to  meet  the  situa- 
tion with  which  we  are  confronted  the  application  of  remedies  two- 
fold in  character  becomes  essential :  1st.  To  forbid  the  doing  in  the 
future  of  acts  like  those  which  we  have  found  to  have  been  done 
in  the  past  which  would  be  violative  of  the  statute.  2d.  The  exer- 
tion of  such  measure  of  relief  as  will  effectually  dissolve  the  com- 
bination found  to  exist  in  violation  of  the  statute,  and  thus  neutral- 
ize the  extension  and  continually  operating  force  which  the  pos- 
session of  the  power  unlawfully  obtained  has  brought  and  will 
continue  to  bring  about. 

The  court  below  by  virtue  of  sections  1,  2  and  4  of  its  decree, 
adjudged  that  the  New  Jersey  corporation  in  so  far  held  the  stock 
of  the  various  corporations,  recited  in  sections  2  and  4  of  the  de- 
cree, or  controlled  the  same  was  a  combination  in  violation  of  the 
first  section  of  the  act,  and  an  attempt  to  monopolize  or  a  monopoli- 
zation contrary  to  the  second  section  of  the  act.  It  commanded  the 
dissolution  of  the  combination,  and  therefore  in  effect,  directed  the 
transfer  by  the  New  Jersey  corporation  back  to  the  stockholders  of 
the  various  subsidiary  corporations  entitled  to  the  same,  the  stock 


122  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

which  had  been  turned  over  to  the  New  Jersey  company  in  exchange 
for  its  stock. 

So  far  as  the  decree  held  that  the  ownership  of  the  stock  of  the 
New  Jersey  corporation  constituted  a  combination  in  violation  of 
the  first  section  and  an  attempt  to  create  a  monopoly  or  to  monopo- 
lize under  the  second  section  and  commanded  the  dissolution  of  the 
combination,  the  decree  was  clearly  appropriate. 

We  think  that  in  view  of  the  magnitude  of  the  interests  involved 
and  their  complexity  that  the  delay  of  thirty  days  allowed  for  ex- 
ecuting, the  decree  was  too  short  and  should  be  extended  so  as  to 
embrace  a  period  of  at  least  six  months.  So,  also,  in  view  of  the 
possible  serious  injury  to  result  to  the  public  from  an  absolute  cessa- 
tion of  interstate  commerce  in  petroleum  and  its  products  by  such 
vast  agencies  as  are  embraced  in  the  combination,  a  result  which 
might  arise  from  that  portion  of  the  decree  which  enjoined  carrying 
on  of  interstate  commerce  not  only  by  the  New  Jersey  corporation, 
but  by  all  .the  subsidiary  companies,  until  the  dissolution  of  the 
combination  by  the  transfer  of  the  stocks  in  accordance  with  the 
decree  should  not  have  been  awarded. 

Our  conclusion  is  that  the  decree  below  was  right  and  should  be 
affirmed,  except  as  to  the  minor  matters  concerning  which  we  have 
indicated  the  decree  should  be  modified.  Our  order  will  therefore 
be  one  of  affirmance,  with  directions,  however,  to  modify  the  decree 
in  accordance  with  this  opinion.  The  court  below  to  retain  jurisdic- 
tion to  the  extent  necessary  to  compel  compliance  in  every  respect 
with  its  decree.  And  it  is  so  ordered. 


Note. — As  a  sequel  to  the  Standard  Oil  decision,  on  November  15,  1911, 
the  Oil  Trust  presented  to  the  government  a  plan  providing  for  its  "dissolu- 
tion." Under  this  plan,  the  Standard  Oil  Company  of  New  Jersey,  as  the 
great  stock  holding  company,  gave  up  its  control  over  the  subsidiary  oil 
companies,  so  that  thereafter  such  companies  should  conduct  their  business 
as  independent  concerns  in  competition  with  each  other  in  the  oil  industry. 
Theoretically  the  oil  trust  passed  out  of  existence  by  this  plan,  though  the 
Standard  Oil  Company  of  New  Jersey  still  retained  its  existence  as  a 
corporation.  The  stock  held  by  the  company  was  distributed  and  each 
stockholder  in  the  Standard  Oil  Company  received  his  proportionate  share 
of  the  stock  in  each  of  the  subsidiary  oil  companies.  The  plan  was  approved 
by  the  government  and  went  into  operation  on  December  1,  1911. 

UNITED   STATES  vs.   AMERICAN   TOBACCO   COMPANY 

AND  OTHERS. 

221  U.  S.  106.     May,  1911. 

The  United  States  Government  brought  suit  in  the  Circuit  Court 
of  the  United  States  for  the  Southern  District  of  New  York  to  dis- 
solve a  combination  in  control  of  the  tobacco  industry,  alleged  to  be 
in  violation  of  the  first  and  second  sections  of  the  Sherman  Anti- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  123 

Trust  law  of  July  2nd,  1890.  The  defendants  to  the  suit  were 
twenty-nine  individuals,  sixty-five  American  corporations,  most  of 
them  created  in  the  State  of  New  Jersey,  and  two  English  corpora- 
tions. 

The  primary  defendant  was  the  American  Tobacco  Company,  a 
New  Jersey  corporation,  together  with  five  principal  accessory 
corporations,  viz.,  the  American  Snuff  Company,  the  American  Cigar 
Company,  the  American  Stogie  Company,  the  MacAndrews  & 
Forbes  Company,  and  the  Conley  Foil  Company,  all  of  which  were 
corporations  of  New  Jersey.  The  government  contended  that  the 
combination  was  in  restraint  of  trade,  not  alone  because  of  the 
nature  and  character  of  the  American  Tobacco  Company  and  the 
enormous  power  which  it  exerted  in  the  tobacco  business  because  of 
its  stock  ownership  in  the  five  great  accessory  corporations,  but  also 
because  of  its  control  over  the  fifty-nine  subsidiary  corporations 
engaged  in  the  tobacco  trade,  owing  to  the  fact  that  the  greater  part 
of  the  stock  of  such  subsidiary  corporations  was  in  turn  owned  by 
the  five  accessory  corporations. 

In  1890  the  American  Tobacco  Company  was  formed  under  New 
Jersey  laws  with  a  capital  stock  of  $25,000,000.  By  various  pur- 
chases and  acquisitions  of  tobacco  concerns  doing  business  in  the 
several  States  in  the  period  from  1890  to  1898,  the  American  To- 
bacco Company  controlled  the  manufacture  of  86  per  cent,  of  all 
the  cigarettes  produced  in  the  United  States,  above  26  per  cent, 
of  all  the  smoking  tobacco,  more  than  22  per  cent,  of  all  plug 
tobacco,  51  per  cent,  of  all  little  cigars,  6  per  cent,  of  all  snuff 
and  fine  cut  tobacco,  and  over  2  per  cent,  of  all  cigars  and  cheroots. 
In  1898  the  American  Tobacco  Company  organized  a  New  Jersey 
corporation  styled  the  Continental  Tobacco  Company,  with  a  capital 
of  $75,000,000,  afterwards  increased  to  $100,000,000,  and  the  new 
company  took  transfers  to  the  plant,  assets  and  business  of  five  large 
and  successful  competing  plug  manufactories.  In  1899  the  Amer- 
ican Tobacco  Company  and  the  Continental  Tobacco  Company,  at 
an  aggregate  cost  of  fifty  million  dollars,  bought  and  closed  up  thirty 
large  competing  tobacco  concerns  in  'the  United  States.  Subse- 
quently five  great  corporations  were  formed,  viz.,  the  Conley  Foil 
Company,  which  supplied  all  the  tin  foil  used  by  the  combined 
tobacco  companies ;  the  American  Cigar  Company,  which  manu- 
factured and  distributed  domestic  cigars ;  the  MacAndrews  &  Forbes 
Company,  whi(:h  controlled  the  manufacture  of  licorice  used  in 
plug  tobacco;  the  American  Stogie  Company,  which  took  over  the 
stogie  and  tobie  business  of  the  combination,  and  the  Consolidated 
Tobacco  Company,  which  was  chartered  with  broad  powers  to  do 
business  throughout  the  world  and  to  guarantee  the  securities  of 
the  other  companies  of  the  combination.  By  means  of  the  United 
Cigar  Stores  Company,  the  combination  established  itself  in  the 
retail  tobacco  trade  with  thousands  of  stores  throughout  the  country. 
Finally,  in  1904,  the  (old)  American  Tobacco  Company,  the  Con- 
tinental Tobacco  Company  and  the  Consolidated  Tobacco  Company 


124  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

were  merged  into  one  gigantic  corporation  'with  a  capital  of  $180,- 
000,000.  The  same  methods  continued  to  be  employed  which  had 
been  used  from  the  beginning,  i.  e.,  competing  concerns  were  pur- 
chased and  closed  up,  or  else  transferred  to  one  of  the  corporations 
controlled  by  the  combination. 

MR.  CHIEF  JUSTICE  WHITE  (after  stating  the  above  facts)  de- 
livered the  opinion  of  the  court. 

That  situation  and  the  vast  power  which  the  principal  and  ac- 
cessory corporate  defendants  and  the  small  number  of  individuals 
who  own  a  majority  of  the  common  stock  of  the  new  American 
Tobacco  Company  exert  over  the  marketing  of  tobacco  as  a  raw 
product,  its  manufacture,  its  marketing  when  manufactured,  and 
its  consequent  movement  in  the  channels  of  interstate  commerce, 
indeed,  relatively,  over  foreign  commerce,  and  the  commerce  of 
the  whole  world,  in  the  raw  and  manufactured  products,  stand  out 
in  such  bold  relief  from  the  undisputed  facts  which  have  been  stated 
as  to  lead  us  to  pass  at  once  to  the  second  fundamental  proposition 
which  we  are  required  to  consider.  That  is,  the  construction  of  the 
anti-trust  act,  and  the  application  of  the  act,  as  rightly  construed, 
to  the  situation  as  proven  in  consequence  of  having  determined  the 
ultimate  and  final  inferences  properly  deducible  from  the  undisputed 
facts  which  we  have  stated. 

The  construction  and  application  of  the  anti-trust  act. 

If  the  anti-trust  law  is  applicable  to  the  entire  situation  here  pre- 
sented, and  is  adequate  to  afford  complete  relief  for  the  evils  which 
the  United  States  insists  that  situation  presents,  it  can  only  be  be- 
cause that  law  will  be  given  a  more  comprehensive  application  than 
has  been  affixed  to  it  in  any  previous  decision.  This  will  be  the  case 
because  the  undisputed  facts  as  we  have  stated  them  involve  ques- 
tions as  to  the  operation  of  the  anti-trust  law  not  hitherto  presented 
in  any  case.  Thus,  even  if  the  ownership  of  stock  by  the  American 
Tobacco  Company  in  the  accessory  and  subsidiary  companies,  and 
the  ownership  of  stock  in  any  of  those  companies  among  them- 
selves, were  held,  as  was  decided  in  the  Standard  Oil  Company 
case,  to  be  a  violation  of  the  act,  and  all  relations  resulting  from 
such  stock  ownership  were  therefore  set  aside,  the  question  would 
yet  remain  whether  the  principal  defendant,  the  American  Tobacco 
Company,  and  the  five  accessory  defendants,  even  when  divested 
of  their  stock  ownership  in  other  corporations,  by  virtue  of  the 
power  which  they  would  continue  to  possess,  even  although  thus 
stripped,  would  amount  to  a  violation  of  both  the  1st  and  2nd  sec- 
tions of  the  act.  Again,  if  it  were  held  that  the  corporation,  the 
existence  whereof  was  due  to  a  combination  between  such  com- 
panies and  other  companies,  was  a  violation  of  the  act,  the  ques- 
tion would  remain  whether  such  of  the  companies  as  did  not 
owe  their  existence  and  power  to  combinations,  but  whose  power 
alone  arose  from  the  exercise  of  the  right  to  acquire  and  own  prop- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  125 

erty,  would  be  amenable  to  the  prohibitions  of  the  act.  Yet  further : 
Even  if  this  proposition  was  held  in  the  affirmative,  the  question 
would  remain  whether  the  principal  defendant,  the  American  To- 
bacco Company,  when  stripped  of  its  stock  ownership,  would  be, 
in  and  of  itself,  within  the  prohibitions  of  the  act,  although  that 
company  was  organized  and  took  being  before  the  anti-trust  act 
was  passed.  Still  further,  the  question  would  yet  remain  whether 
particular  corporations  which,  when  bereft  of  the  power  which 
they  possessed  as  resulting  from  stock  ownership,  although  they 
were  not  inherently  possessed  of  a  sufficient  residuum  of  power  to 
cause  them  to  be,  in  and  of  themselves,  either  a  restraint  of  trade 
or  a  monopolization  or  an  attempt  to  monopolize,  should  neverthe- 
less be  restrained  because  of  their  intimate  connection  and  associa- 
tion with  other  corporations  found  to  be  within  the  prohibitions  of 
the  act. 

The  soundness  of  the  rule  that  the  statute  should  receive  a  reason- 
able construction,  after  further  mature  deliberation,  we  see  no 
reason  to  doubt.  Indeed,  the  necessity  for  not  departing  in  this 
case  from  the  standard  of  the  rule  of  reason  which  is  universal 
in  its  application  is  so  plainly  required  in  order  to  give  effect  to  the 
remedial  purposes  which  the  act  under  consideration  contemplates, 
and  to  prevent  that  act  from  destroying  all  liberty  of  contract  and 
all  substantial  right  to  trade,  and  thus  causing  the  act  to  be  at  war 
with  itself  by  annihilating  the  fundamental  right  of  freedom  to 
trade  which,  on  the  very  face  of  the  act,  it  was  enacted  to  preserve, 
is  illustrated  by  the  record  before  us.  In  truth,  the  plain  demon- 
stration which  this  record  gives  of  the  injury  which  would  arise 
from,  and  the  promotion  of  the  wrongs  which  the  statute  was  in- 
tended to  guard  against,  which  would  result  from  giving  to  the 
statute  a  narrow,  unreasoning  and  unheard-of  construction,  as  illus- 
trated by  the  record  before  us,  if  possible  serves  to  strengthen  our 
conviction  as  to  the  correctness  of  the  rule  of  construction — the  rule 
of  reason  which  was  applied  in  the  Standard  Oil  case,  the  appli- 
cation of  which  rule  to  the  statute  we  now,  in  the  most  unequivocal 
terms,  re-express  and  re-affirm. 

Coming,  then,  to  apply  to  the  case  before  us  the  act  as  interpreted 
in  the  Standard  Oil  and  previous  cases,  all  the  difficulties  suggested 
by  the  mere  form  in  which  the  assailed  transactions  are  clothed  be- 
come of  no  moment.  This  follows  because,  although  it  was  held 
in  the  Standard  Oil  case  that,  giving  to  the  statute  a  reasonable 
construction,  the  words  "restraint  of  trade"  did  not  embrace  all 
those  normal  and  usual  contracts  essential  to  individual  freedom, 
and  the  right  to  make  which  was  necessary  in  order  that  the  course 
of  trade  might  be  free,  yet,  as  a  result  of  the  reasonable  construc- 
tion which  was  affixed  to  the  statute,  it  was  pointed  out  that  the 
generic  designation  of  the  1st  and  2nd  sections  of  the  law,  when 
taken  together,  embraced  every  conceivable  act  which  could  possi- 
bly come  within  the  spirit  or  purpose  of  the  prohibition  of  the  law, 


126  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

without  regard  to  the  garb  in  which  such  acts  are  clothed.  That 
is  to  say,  it  was  held  that,  in  view  of  the  general  language  of  the 
statute  and  the  public  policy  which  it  manifested,  there  was  no  pos- 
sibility of  frustrating  that  policy  by  resorting  to  any  disguise  or 
subterfuge  of  form,  since  resort  to  reason  rendered  it  impossible 
to  escape,  by  any  indirection,  the  prohibitions  of  the  statute. 

Considering,  then,  the  undisputed  facts  which  we  have  previously 
stated,  it  remains  only  to  determine  whether  they  establish  that  the 
acts,  contracts,  agreements,  combinations,  etc.,  which  are  assailed, 
were  of  such  an  unusual  and  wrongful  character  as  to  bring  them 
within  the  prohibitions  of  the  law.  That  they  were,  in  our  opinion 
so  overwhelmingly  results  from  the  undisputed  facts  that  it  seems 
only  necessary  to  refer  to  the  facts  as  we  have  stated  them  to 
demonstrate  the  correctness  of  this  conclusion.  Indeed,  the  history 
of  the  combination  is  so  replete  with  the  doing  of  acts  which  it  was 
the  obvious  purpose  of  the  statute  to  forbid,  so  demonstrative  of 
the  existence  from  the  beginning  of  a  purpose  to  acquire  dominion 
and  control  of  the  tobacco  trade,  not  by  the  mere  exertion  of  the 
ordinary  right  to  contract  and  to  trade,  but  by  methods  devised  in 
order  to  monopolize  the  trade  by  driving  competitors  out  of  busi- 
ness, which  were  ruthlessly  carried  out  upon  the  assumption  that  to 
work  upon  the  fears  or  play  upon  the  cupidity  of  competitors  would 
make  success  possible.  We  say  these  conclusions  are  inevitable,  not 
because  of  the  vast  amount  of  property  aggregated  by  the  com- 
bination, not  because,  alone,  of  the  many  corporations  which  the 
proof  shows  were  united  by  resort  to  one  device  or  another.  Again, 
not  alone  because  of  the  dominion  and  control  over  the  tobacco 
trade  which  actually  exists,  but  because  we  think  the  conclusion 
of  wrongful  purpose  and  illegal  combination  is  overwhelmingly 
established. 

Leading  as  this  does  to  the  conclusion  that  the  assailed  com- 
bination in  all  its  aspects — that  is  to  say,  whether  it  be  looked  at 
from  the  point  of  view  of  stock  ownership  or  from  the  standpoint 
of  the  principal  corporation  and  the  accessory  or  subsidiary  cor- 
porations, viewed  independently,  including  the  foreign  corporations 
in  so  far  as  by  the  contracts  made  by  them  they  become  co-operators 
in  the  combination — comes  within  the  prohibitions  of  the  1st  and 
2nd  sections  of  the  anti-trust  act,  it  remains  only  finally  to  consider 
the  remedy  which  it  is  our  duty  to  apply  to  the  situation  thus  found 
to  exist. 

The  remedy. 

Under  these  circumstances,  taking  into  mind  the  complexity  of 
the  situation  in  all  of  its  aspects,  and  giving  weight  to  the  many- 
sided  considerations  which  must  control  our  judgment,  we  think, 
so  far  as  the  permanent  relief  to  be  awarded  is  concerned,  we  should 
decree  as  follows :  1st.  That  the  combination,  in  and  of  itself,  as 
well  as  each  and  all  of  the  elements  composing  it,  whether  corporate 
or  individual,  whether  considered  collectively  or  separately,  be  de- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  127 

creed  to  be  in  restraint  of  trade  and  an  attempt  to  monopolize  and 
a  monopolization  within  the  1st  and  2nd  sections  of  the  anti-trust 
act.  2nd.  That  the  court  below,  in  order  to  give  the  effective 
force  to  our  decree  in  this  regard,  be  directed  to  hear  the  parties, 
by  evidence  or  otherwise,  as  it  may  be  deemed  proper,  for  the  pur- 
pose of  ascertaining  and  determining  upon  some  plan  or  method 
of  dissolving  the  combination  and  of  recreating,  out  of  the  ele- 
ments now  composing  it,  a  new  condition  which  shall  be  honestly 
in  harmony  with  and  not  repugnant  to  the  law.  3rd.  -That  for  the 
accomplishment  of  these  purposes,  taking  into  view  the  difficulty  of 
the  situation,  a  period  of  six  months  is  allowed  from  the  receipt  of 
our  mandate,  with  leave,  however,  in  the  event,  in  the  judgment  of 
the  court  below,  the  necessities  of  the  situation  require,  to  extend 
such  period  to  a  further  time  not  to  exceed  sixty  days.  4th.  That 
in  the  event,  before  the  expiration  of  the  period  thus  fixed,  a  con- 
dition of  disintegration  in  harmony  with  the  law  is  not  brought 
about,  either  as  the  consequences  of  the  action  of  the  court  in  de- 
termining an  issue  on  the  subject,  or  in  accepting  a  plan  agreed 
upon,  it  shall  be  the  duty  of  the  court,  either  by  way  of  an  injunc- 
tion restraining  the  movement  of  the  products  of  the  combination  in 
the  channels  of  interstate  or  foreign  commerce,  or  by  the  appoint- 
ment of  a  receiver,  to  give  effect  to  the  requirements  of  the  statute. 

And  it  is  so  ordered. 


Note. — The  Supreme  Court  in  its  decree  ordered  the  United  States  Circuit 
Court  in  New  York  to  hear  the  parties  to  the  case  "for  the  purpose  of 
ascertaining  and  determining  upon  some  plan  or  method  of  dissolving  the 
combination  and  recreating  a  new  condition  not  repugnant  to  law."  Ac- 
cordingly, on  November  9th,  1911,  the  American  Tobacco  Company  presented 
to  the  Circuit  Court  a  plan  providing  for  the  disintegration  of  the  Tobacco 
Trust.  The  plan  with  some  modifications  was  found  acceptable  to  the 
Attorney-General  of  the  United  States,  representing  the  government,  and 
by  order  of  the  court  was  put  into  operation.  Under  its  provisions,  the 
properties  of  the  trust  were  divided  among  several  corporations  legally 
distinct  from  each  other,  and  the  stock  of  these  corporations  was  distributed 
pro  rata  among  the  stockholders  of  the  American  Tobacco  Company.  By 
this  means,  it  was  claimed,  a  state  of  competition  was  restored  in  the 
tobacco  industry.  The  principal  new  corporations  were  the  American 
Tobacco  Company  reorganized,  the  Lorillard  Company,  the  Liggett  and 
Myers  Company,  and  the  Reynolds  Tobacco  Company.  The  plan  was  bitterly 
opposed  by  the  "Independent  Tobacco  Concerns,"  who  claimed  that  each 
corporation  as  above  was  a  trust  and  monopoly  in  itself.  A  petition  was 
presented  to  the  Supreme  Court  to  review  the  action  of  the  Circuit  Court, 
but  the  petition  was  not  entertained  by  the  Supreme  Court. 


128  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

UNITED    STATES   v.    TERMINAL    RAILROAD    ASSOCIA- 
TION OF  ST.  LOUIS. 

224  U.  S.,  383.     1912. 

The  United  States  Government  filed  a  bill  in  equity  in  the 
Circuit  Court  of  the  United  States  for  the  Eastern  District  of  Mis- 
souri to  enforce  the  provisions  of  the  Sherman  Anti-Trust  Act 
against  the  Terminal  Railroad  Association  of  St.  Louis  as  principal 
defendant  and  thirty-eight  corporate  and  individual  defendants. 
The  terminal  association  was  organized  in  1889  for  the  express 
purpose  of  acquiring  the  properties  of  several  independent  terminal 
companies  at  St.  Louis  with  a  view  to  combining  and  operating 
them  as  a  unitary  system. 

Altogether  there  are  twenty-four  lines  of  railway  converging 
at  St.  Louis  and  about  one-half  of  these  lines  have  their  termini 
on  the  Illinois  side  of  the  Mississippi  River,  while  the  others  coming 
from  the  west  and  north  have  their  termini  either  in  the  city  or  on 
its  northern  edge.  The  river,  once  the  great  highway  of  the  city's 
commerce,  is  now  the  great  obstacle  to  connection  between  the 
termini  of  lines  on  opposite  sides  of  the  river  and  any  entry  into 
the  city  by  eastern  lines.  The  cost  of  construction  and  maintenance 
of  railroad  bridges  over  so  great  a  river  makes  it  impracticable  for 
every  road  desiring  to  enter  or  pass  through  the  city  to  have  its 
own  bridge.  The  solution  of  this  problem  to  the  city  of  St.  Louis 
was  the  building  and  maintenance  of  railroad  toll  bridges  open  to 
the  use  of  any  and  all  lines  upon  equal  terms.  There  already  existed 
a  car  ferry  known  as  the  Wiggins  Ferry  Company,  which  had 
switching  yards  and  terminal  facilities  and  was  able  to  interchange 
traffic  between  the  railroad  systems  on  opposite  sides  of  the  rivei, 
but  not  to  the  extent  required.  So  there  was  built  a  bridge  called 
the  Eads  Bridge,  which  was  a  toll  bridge  and  open  to  use  by  car- 
riers on  equal  terms.  But  it  was  essential  to  connect  this  bridge  with 
the  various  railroad  termini  in  the  city.  Therefore  independent  com- 
panies called  terminal  companies  were  organized  which  built  and 
operated  lines  making  the  necessary  connections.  Thus,  though  the 
bridge  might  be  used  by  all  upon  equal  terms,  it  was  accessible  only 
by  means  of  the  several  terminal  companies  operating  lines  con- 
necting it  with  the  railroad  termini.  A  second  bridge  was  con- 
structed, called  the  Merchants  Bridge,  but  like  the  Eads  Bridge, 
it  had  no  rail  connections  with  any  of  the  existing  railroad  systems, 
and  these  facilities  were  likewise  supplied  by  a  number  of  inde- 
pendent railway  companies  which  filled  in  the  gaps  between  the 
bridge  ends  and  the  termini  of  railroads  on  both  sides  of  the 
river.  The  result  was  that  it  was  practically  impossible  for  any 
railway  company  to  pass  through  or  even  enter  St.  Louis,  so  as  to 
be  within  reach  of  its  industries  or  commerce,  without  using  the 
facilities  entirely  controlled  by  the  terminal  companies. 

The  independent  existence  of  these  three  terminal  systems  guar- 
anteed a  considerable  measure  of  competition  between  them  for  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  129 

business  of  each  other,  and  gave  to  carriers  and  shippers  some 
choice  as  to  the  way  by  which  they  would  enter  the  city.  The 
promoters  of  the  defendant  company,  the  Terminal  Railroad  Asso- 
ciation planned  to  obtain  the  control  of  every  feasible  means  of 
railroad  access  to  St.  Louis,  or  means  of  connecting  the  lines  of 
railway  on  opposite  sides  of  the  river.  By  successive  steps  the 
association  acquired  the  terminal  railroad  lines,  the  Eads  Bridge, 
the  Merchants  Bridge,  and  finally  the  Wiggins  Ferry,  so  that  the 
three  independent  terminal  systems  were  combined  into  a  single 
system. 

It  was  alleged  that  certain  practices  of  the  terminal  association 
were  arbitrary  and  discriminatory.  The  complaints  related  to  rates 
for  certain  short  hauls,  rebilling  at  certain  points,  and  exemption 
from  such  rates,  in  favor  of  other  points,  as  well  as  general  ar- 
bitrary conduct  of  the  facilities  owned  and  controlled.  The  lower 
court  dismissed  the  suit  of  the  government,  thereupon  an  appeal 
was  taken  to  the  Supreme  Court. 

MR.  JUSTICE  LURTON  delivered  the  opinion  of  the  court: 

*  *  *  *  We  come,  then,  to  the  question  upon  which  the.  case 
must  turn:  Has  the  unification  of  substantially  every  terminal  fa- 
cility by  which  the  traffic  of  St.  Louis  is  served  resulted  in  a  com- 
bination which  is  in  restraint  of  trade  within  the  meaning  and 
purpose  of  the  anti-trust  act? 

It  is  not  contended  that  the  unification  of  the  terminal  facili- 
ties of  a  great  city  where  many  railroad  systems  center  is,  under 
all  circumstances  and  conditions,  a  combination  in  restraint  of  trade 
or  commerce.  Whether  it  is  a  facility  in  aid  of  inter-state  com- 
merce or  an  unreasonable  restraint,  forbidden  by  the  Act  of  Con- 
gress, as  construed  and  applied  by  this  court  in  the  cases  of  Stan- 
dard Oil  Co.  v.  United  States,  221  U.  S.  1,  and  United  States  v. 
American  Tobacco  Co.,  221  U.  S.  106,  will  depend  upon  the  intent 
to  be  inferred  from  the  extent  of  the  control  thereby  secured  over 
instrumentalities  which  such  commerce  is  under  compulsion  to  use, 
the  method  by  which  such  control  has  been  brought  about,  and 
the  manner  in  which  that  control  has  been  exerted.  *  *  *  * 
We  are  not  unmindful  of  the  essential  difference  between  terminal 
systems  properly  so  described  and  railroad  transportation  companies. 
The  first  are  but  instrumentalities  which  assist  the  latter  in  the 
transfer  of  traffic  between  different  lines,  and  in  the  collection  and 
distribution  of  traffic.  They  are  a  modern  evolution  in  the  doing 
of  railroad  business,  and  are  of  the  greatest  public  utility.  They, 
under  proper  conditions  do  not  restrain,  but  promote  commerce. 
*  *  *  *  While,  therefore,  the  mere  combination  of  several 
independent  terminal  systems  into  one  may  not  operate  as  a  re- 
straint upon  the  interstate  commerce  which  must  use  them,  yet 
there  may  be  conditions  which  will  bring  such  a  combination  under 
the  prohibition  of  the  Sherman  Act.  The  one  in  question,  counsel 
say,  is  not  antagonistic  to,  but  in  harmony  with,  the  anti-trust  act, 
because  it  expands  competition  by  extending  equal  conveniences  and 


130  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

advantages  to  all  shippers  located  upon  each  of  the  three  systems 
for  all  traffice  to  and  from  St.  Louis ;  expedites  and  economizes  the 
service.  *  *  *  *  The  terminal  properties  in  question  are  not 
so  controlled  and  managed,  in  view  of  the  inherent  local  conditions, 
as  to  escape  condemnation  as  a  restraint  upon  commerce.  They  are 
not  under  a  common  control  and  ownership.  Nor  can  this  be  brought 
about  unless  the  prohibition  against  the  admission  of  other  com- 
panies to  such  control  is  stricken  out  and  provision  made  for  the 
admission  of  any  company  to  an  equal  control  and  management 
upon  an  equal  basis  with  the  present  proprietary  companies.  (The 
opinion  then  discusses  the  practices  of  the  association  with  respect 
to  arbitrary  charges  on  certain  "short  hauls,"  also  an  exception 
to  these  charges  in  the  case  of  traffic  originating  in  a  section  known 
as  the  "Green  Line  Territory"  and  also  the  practice  of  rebilling  and 
of  making  a  distinct  hauling  charge  at  East  St.  Louis.  The  Court 
finds  that  the  violation  of  the  anti-trust  act  is  found  principally  in 
the  methods  of  the  administration  and  management  of  the  properties 
and  facilities  of  the  association  rather  than  in  any  inherent  viola- 
tion as  found  in  the  agreement  consolidating  the  above  described 
three  systems.  The  opinion  continues)  :  Plainly  the  combination 
which  has  occurred  would  not  be  an  illegal  restraint  under  the 
terms  of  the  statute  if  it  were  what  is  claimed  for  it,  a  proper  ter- 
minal association  acting  as  the  impartial  agent  of  every  line  which 
is  under  compulsion  to  use  its  instrumentalities.  If,  as  we  have 
pointed  out,  the  violation  of  the  statute  in  view  of  the  inherent 
physical  conditions,  grows  out  of  administrative  conditions  which 
may  be  eliminated  and  the  obvious  advantages  of  unification  pre- 
served, such  a  modification  of  the  agreement  between  the  terminal 
company  and  the  proprietary  as  shall  constitute  the  former  the 
t>ona  fide  agent  and  servant  of  every  railroad  line  which  shall  use 
its  facilities,  and  an  inhibition  of  certain  methods  of  administration 
to  whch  we  have  referred,  will  amply  vindicate  the  wise  purpose 
•of  the  statute,  and  will  preserve  to  the  public  a  system  of  great 
public  advantage. 

These  considerations  lead  to  a  reversal  of  the  decree  dismissing 
the  bill.  This  is  accordingly  adjudged,  and  the  case  is  remanded  to 
the  district  court,  with  directions  that  a  decree  be  there  entered 
directing  the  parties  to  submit  to  the  court,  within  ninety  days  after 
receipt  of  mandate,  a  plan  for  the  reorganization  of  the  contract 
between  the  fourteen  defendant  railroad  companies  and  the  ter- 
minal company,  which  we  have  pointed  out  as  bringing  the  com- 
bination within  the  inhibition  of  the  statute. 

First.  By  providing  for  the  admission  of  any  existing  or  future 
railroad  to  joint  ownership  and  control  of  the  combined  terminal 
properties,  upon  such  just  and  reasonable  terms  as  shall  place  such 
applying  company  upon  a  plane  of  equality  in  respect  of  benefits 
and  burdens  with  the  present  proprietary  companies. 

Second,  Such  plan  of  reorganization  must  also  provide  definitel> 
for  the  use  of  the  terminal  facilities  by  any  other  railroad  not 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  131 

electing  to  become  a  joint  owner,  upon  such  just  and  reasonable 
terms  and  regulations  as  will,  in  respect  of  use,  character,  and  cost 
of  service,  place  every  such  company  upon  as  nearly  an  equal 
plane  as  may  be  with  respect  to  expenses  and  charges  as  that  occu- 
pied by  the  proprietary  companies. 

Third.  By  eliminating  from  the  present  agreement  between  the 
terminal  company  and  the  proprietary  companies  any  provision 
which  restricts  any  such  company  to  the  use  of  the  facilities  of  the 
terminal  company. 

Fourth.  By  providing  for  the  complete  abolition  of  the  exist- 
ing practice  of  billing  to  East  St.  Louis,  or  other  junction  points, 
and  then  rebilling  traffic  destined  to  St.  Louis,  or  to  points  beyond. 

Fifth.  By  providing  for  the  abolition  of  any  special  or  so-called 
arbitrary  charge  for  the  use  of  the  terminal  facilities  in  respect 
of  traffic  originating  within  the  so-called  100  miles  area,  that  is  not 
equally  and  in  like  manner  applied  in  respect  of  all  other  traffic 
of  a  like  character  originating  outside  of  that  area. 

Sixth.  By  providing  that  any  disagreement  between  any  com- 
pany applying  to  become  a  joint  owner  or  user,  as  herein  provided 
for  and  the  terminal  or  proprietary  companies,  which  shall  arise 
after  a  final  decree  in  this  cause,  may  be  submitted  to  the  district 
court  upon  a  petition  filed  in  this  cause  subject  to  review  by  appeal 
in  the  usual  manner. 

Seventh.  To  avoid  any  possible  misapprehension,  the  decree 
should  also  contain  a  provision  that  nothing  therein  shall  be  taken 
to  effect  in  any  wise  or  at  any  time  the  power  of  the  Interstate  Com- 
merce Commission  over  the  rates  to  be  charged  by  the  terminal 
company,  or  the  mode  of  billing  traffic  passing  over  its  lines  or  the 
establishing  of  joint  through  rates  or  routes  over  its  lines,  or  any 
other  power  conferred  by  law  upon  such  commission. 

Upon  failure  of  the  parties  to  come  to  an  agreement  which  is  in 
substantial  accord  with  this  opinion  and  decree,  the  court  will,  after 
hearing  the  parties  upon  a  plan  for  the  dissolution  of  the  combination 
between  the  terminal  company,  the  Wiggins  Ferry  Company,  the 
Merchants'  Bridge  Company,  and  the  several  terminal  companies  re- 
lated to  the  Ferry  and  Merchants'  Bridge  Company,  make  such  order 
and  decree  for  the  complete  disjoinder  of  the  three  systems,  and  their 
future  operation  as  independent  systems,  as  may  be  necessary,  en- 
joining the  defendants,  singly  and  collectively,  from  any  exercise 
of  control  or  dominion  over  either  of  the  said  terminal  systems, 
or  their  related  constituent  companies,  through  lease,  purchase,  or 
stock  control,  and  enjoining  the  defendants  from  voting  any  share 
in  any  of  said  companies  or  receiving  dividends,  directly  or  indi- 
rectly, or  from  any  future  combination  of  the  said  systems,  in 
evasion  of  such  decree  or  any  part  thereof. 


132  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

UNITED  STATES  v.  READING  COMPANY. 
TEMPLE  IRON  COMPANY  v.  UNITED  STATES. 
READING  COMPANY  v.  UNITED  STATES.     . . 

ANTHRACITE  COAL  TRUST  CASE. 
226  U.  S.  324.     December  16,  1912. 

A  petition  in  equity  was  filed  by  the  United  States  in  the  circuit 
court  of  the  United  States  for  the  Eastern  District  of  Pennsylvania, 
for  the  purpose  of  enforcing  the  provisions  of  the  Sherman  Anti- 
Trust  Act  against  an  alleged  combination  of  railroad  and  coal-min- 
ing companies  formed  for  the  purpose  of  restraining  competition  in 
the  production,  sale,  and  transportation  of  anthracite  coal  in  com- 
merce among  the  States. 

The  defendants  originally  were  as  follows : 

The  Philadelphia  &  Reading  Railway  Company,  the  Philadelphia 
&  Reading  Coal  &  Iron  Company,  the  Lehigh  Valley  Railroad  Com- 
pany, the  Lehigh  Valley  Coal  Company,  the  Delaware,  Lackawanna 
&  Western  Railroad  Company,  the  Central  Railroad  Company  of 
New  Jersey,  the  Erie  Railroad  Company,  the  New  York,  Susque- 
hanna  &  Western  Railroad  Company,  the  New  York,  Susquehanna 
&  Western  Coal  Company,  the  Lehigh  &  Wilkes-Barre  Coal  Com- 
pany, the  Pennsylvania  Coal  Company,  the  Hillside  Coal  Company, 
the  Reading  Company,  and  the  Temple  Iron  Company.  By  an 
amendment  certain  other  defendants  were  brought  in,  consisting  of 
holders  of  contracts  made  by  independent  operators  of  coal  mines. 

The  bill  alleged  that  anthracite  coal  is  an  article  of  prime  necessity 
as  a  fuel,  and  finds  it  market  mainly  in  the  New  England  and  Mid- 
dle Atlantic  States.  The  deposits  of  the  coal,  with  unimportant 
exceptions,  lie  in  the  State  of  Pennsylvania,  but  do  not  occupy  a 
continuous  field,  though  found  in  certain  counties  adjoining  in  the 
eastern  half  of  the  State,  and  embrace  an  area  of  484  square  miles. 
This  coal  region  is  from  150  to  250  miles  from  tide  water.  The 
region  itself  is  broken  and  mountainous,  and  the  natural  conditions 
and  character  of  the  deposits  are  such  that  the  mining  and  reduction 
of  the  coal  to  suitable  sizes  for  domestic  use  require  very  large 
amounts  of  capital.  Its  value  commercially  is  dependent,  in  a 
large  degree,  upon  quick  and  cheap  transportation  to  convenient 
shipping  points  at  tide  water,  from  whence  it  may  be  distributed  to 
the  great  consuming  markets  of  the  Atlantic  Coast  States. 

The  whole  problem  of  advantageously  developing  these  deposits 
and  supplying  the  eastern  demand  for  fuel  was  one  which  presented 
enormous  difficulties.  From  an  early  day  it  has  been  the  settled 
policy  of  the  State  of  Pennsylvania  to  encourage  the  development 
of  this  coal  region  by  canal  and  railroad  construction,  which  would 
furnish  transportation  to  convenient  shipping  points  at  tidewater. 
One  of  the  defendant  carriers,  the  Delaware,  Lackawanna  &  West- 
ern Company,  was  given  the  power  to  acquire  coal  lands  and  engage 
in  the  business  of  mining  and  selling  coal  in  addition  to  the  business 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  133 

of  a  common  carrier,  and  all  railroad  companies  were  permitted  to 
aid  in  the  production  of  coal  by  assisting  coal  mining  companies 
through  the  purchase  of  capital  stock  and  bonds.  Thus,  it  has 
come  about  that  the  defendant  carriers  not  only  dominate  the  trans- 
portation of  coal  from  this  anthracite  region  to  the  great  distribut- 
ing ports  at  New  York  harbor,  but  also  through  their  controlled  coal- 
producing  companies,  produce  and  sell  about  75  per  cent,  of  the 
annual  supply  of  anthracite.  As  a  further  direct  consequence  of 
the  relation  between  coal-producting  and  coal-transporting  com- 
panies, it  has  come  about  that  the  defendant  carrier  companies 
and  the  coal-mining  companies  affiliated  with  the  carrier  companies 
now  own  or  control  about  90  per  cent,  of  the  entire  unmined  area 
of  anthracite,  distributed,  according  to  the  averments  of  the  peti- 
tion, as  follows : 

Reading    Company ' 44      per  cent. 

Lehigh   Valley   Company 16.87  per  cent. 

Del.,  L.  &  Western  Company 6.55  per  cent. 

Central  Railroad  of  New  Jersey 19      per  cent. 

Erie  Railroad   2.59  per  cent. 

N.  Y.  S.  &  Western  Railroad 54  per  cent. 


89.55  per  cent. 

In  addition  to  the  great  coal-mining  companies  subsidiary  to 
one  or  another  of  the  defendant  carrier  companies,  there  are  a 
large  number  of  independent  coal  operators  whose  aggregate  pro- 
duction from  coal  lands,  in  part  leased  from  the  railroad  companies 
or  the  railroad-controlled  coal-producing  companies,  amounts  to 
about  20  per  cent,  of  the  annual  anthracite  supply.  These  inde- 
pendent operators  are  said  to  no  longer  have  the  power  to  compete 
with  the  carrier  defendants  and  their  subsidiary  coal  companies, 
because  a  large  proportion  of  them  have  severally  entered  into  con- 
tracts with  one  or  the  other  of  the  carrier  or  coal-mining  companies 
defendant  for  the  sale  of  the  entire  product  of  their  mines  for  the 
consideration  of  65  per  cent,  of  the  average  market  price  at  tide 
water.  *  *  *  * 

In  1898  many  of  the  independent  coal  operators  in  the  Wyoming 
or  northern  coal  field  became  dissatisfied  with  the  transportation 
and  market  conditions  under  which  they  were  obliged  to  conduct 
their  collieries.  Many  contracts  for  the  sale  of  their  coal  to  the 
defendant  coal  companies  had  expired  or  were  about  to  expire,  and 
they  demanded  either  lower  freight  rates  or  better  prices  from  the 
coal  companies.  A  competing  line  of  railway  from  the  northern 
or  Wyoming  zone  of  the  anthracite  region  to  a  point  on  the  Dela- 
ware River,  where  connection  would  be  made  with  two  or  more  lines 
extending  to  shipping  points  at  New  York  harbor,  was  projected  as 
a  means  of  relieving  the  situation.  The  New  York,  Wyoming  & 
Western  Railroad  was  accordingly  incorporated.  Large  subscrip- 
tions of  stock  were  taken,  the  line  in  part  surveyed,  parts  of  the 
right-of-way  procured,  and  a  large  quantity  of  steel  rails  contracted 
for.  As  the  road  was  to  be  mainly  a  coal-carrying  road,  support 

irn  to 


134  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

from  coal-mining  companies  was  essential.  Its  chief  backing  came 
from  independent  coal  operators.  The  most  important  and  influ- 
ential of  them  was  the  firm  of  Simpson  &  Watkins,  who  controlled 
and  operated  eight  collieries  in  the  region,  having  an  annual  output 
of  more  than  a  million  tons.  The  time  for  such  a  competing  means 
of  transportation  was  auspicious.  Much  of  the  output  of  the  dis- 
trict not  tied  up  by  contracts  of  sale  or  transportation  was  pledged 
to  this  project  and  much  more  was  promised. 

The  construction  of  this  projected  independent  railroad  would 
not  only  have  introduced  competition  into  the  transportation  of  an- 
thracite coal  to  tide  water,  but  it  would  have  enabled  independent 
operators  reached  by  it  to  sell  their  coal  at  distributing  points  in 
free  competition  with  the  defendant  coal  companies. 

The  defendant  companies  combined  together  for  the  purpose  of 
shutting  out  the  proposed  railroad,  and  preventing  competition  with 
them  in  the  transportation  of  coal  from  the  mines  to  other  States, 
and  the  sale  of  coal  in  competition  with  their  own  controlled  coal 
in  the  markets  of  other  States.  The  plan  devised  was  to  detach 
from  the  enterprise  the  powerful  support  of  Simpson  &  Watkins 
and  the  great  tonnage  which  their  co-operation  would  give  to  the 
new  road,  by  acquiring  the  coal  properties  and  collieries  controlled 
by  that  great  independent  firm  of  operators.  This  would  not  only 
strangle  the  project,  but  secure  them  forever  against  new  schemes 
induced  by  the  large  coal  tonnage  produced  by  these  eight  collieries, 
and  secure  not  only  that  tonnage  for  their  own  lines,  but  keep  the 
coal  forever  out  of  competition  with  that  of  their  own  coal-produc- 
ing companies. 

The  scheme  was  worked  out  with  the  result  foreseen  and  intended. 
The  capital  stock  of  a  small  concern  called  the  Temple  Iron  Com- 
pany, aggregating  only  $240,000,  was  all  purchased.  That  company 
was  then  operating  a  small  iron  furnace  near  Reading.  Its  assets 
were  meager,  but  its  charter  was  a  special  legislative  charter  from 
the  State  of  Pennsylvania,  which  gave  it  power  to  engage  in  almost 
any  sort  of  business,  and  to  increase  tits  capital  substantially  at  will. 
Control  of  that  company  having  been  secured,  it  was  used  as  the 
instrument  for  the  purpose  intended. 

The  Temple  Company  increased  its  capital  stock  to  $2,500,000  and 
issued  mortgage  bonds  aggregating  $3,500,000.  Simpson  &  Wat- 
kins  agreed  to  sell  to  the  Temple  Company  their  properties  for 
something  near  $5,000,000.  They  accordingly  transferred  to  the 
Temple  Company  the  capital  shares  in  the  several  coal  companies, 
holding  the  title  to  their  eight  collieries,  and  received  in  exchange 
$2,260,000  in  the  shares  of  the  Temple  Company,  and  $3,500,000 
of  its  mortgage  bonds,  which  they  subsequently  transferred  and 
sold  for  cash.  Thus  the  Temple  Company  became  a  mere  holding 
company  for  and  was  entirely  owned  by  the  combination  of  the 
defendant  railroad  companies,  each  company  having  a  proportion- 
ate interest  therein.  This  combination  of  the  defendants  through 
the  Temple  Iron  Company  was  effective  in  bringing  about  the  de- 
sired result.  The  New  York,  Wyoming  &  Western  Railroad  Com- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  135 

pany  was  successfully  strangled,  and  the  monopoly  of  transporta- 
tion collectively  held  by  the  six  defendant  carrier  companies  was 
maintained. 

It  was  then  charged  by  the  government  that  the  defendant  com- 
panies made  with  nearly  all  of  the  independent  operators  along 
their  lines,  new  contracts  containing  substantially  uniform  pro- 
visions agreed  upon  beforehand  by  the  defendant  carriers  in  concert, 
some  of  the  operators  contracting  with  one  of  the  defendants  and 
some  with  another,  by  which  such  operators  "severally  agreed"  to 
deliver  on  cars  at  breakers  "to  one  or  the  other  of  the  defendant 
carriers,  or  its  subsidiary  coal  company,  all  the  anthracite  coal  there- 
after mined  from  any  of  their  mines  now  opened  and  operated,  or 
which  they  might  thereafter  open  and  operate  at  a  price  15  to  50 
cents  more  than  such  operators  could  realize  when  shipping  and 
selling  on  their  own  account.  The  object  of  these  contracts  was  to 
control  the  sale  of  the  independent  output,  so  as  to  prevent  it  from 
being  sold  in  competition  with  the  output  of  their  own  mines. 

The  government  asked  that  the  combination  be  dissolved.  The 
lower  court  held  that  the  combination  effected  through  the  Temple 
Iron  Company  was  void,  but  refused  to  hold  that  the  contracts  be- 
tween the  defendant  companies  and  the  independent  operators  were 
likewise  illegal.  In  consequence,  appeals  were  taken  both  by  the 
government  and  the  defendants  to  the  Supreme  Court. 

MR.  JUSTICE  LURTON  delivered  the  opinion  of  the  court: 

The  defendants  insist  that  these  contracts,  i.  e.,  between  the  de- 
fendants and  the  independent  operators,  were  but  the  outgrowth 
of  conditions  peculiar  to  the  anthracite  coal  region,  and  are  not 
unreasonably  in  restraint  of  competition,  but  mutually  advantage- 
ous to  buyer  and  seller. 

That  the  act  of  Congress  does  not  forbid  or  restrain  the  power 
to  make  normal  and  usual  contracts  to  further  trade  by  resorting 
to  all  normal  methods,  whether  by  agreement  or  otherwise,  to  ac- 
complish such  purpose,  was  pointed  out  in  the  Standard  Oil  Case, 
221  U.  S.  1.  In  that  case  it  was  also  said  that  the  words  "restraint 
of  trade"  should  be  given  a  meaning  which  would  not  destroy  the 
individual  right  of  contract,  and  render  difficult,  if  not  impossible, 
any  movement  of  trade  in  the  character  of  interstate  commerce, 
the  free  movement  of  which  it  was  the  purpose  of  the  statute  to 
protect.  We  reaffirm  this  view  of  the  plain  meaning  of  the  statute, 
and  in  so  doing  limit  ourselves  to  the  inquiry  as  to  whether  this 
plan  or  system  of  contracts  entered  into  according  to  a  concerted 
scheme  does  not  operate  to  unduly  suppress  competition  and  re- 
strain freedom  of  commerce  among  the  states. 

Before  these  contracts  there  existed  not  only  the  power  to  com- 
pete, but  actual  competition  between  the  coal  of  the  independents 
and  that  produced  by  the  buying  defendants.  Such  competition  was, 
after  the  contracts,  impracticable.  It  is,  of  course,  obvious  that 
the  law  may  not  compel  competition  between  these  independent  coal 
operators  and  the  defendants,  but  it  may  at  least  remove  illegal 


136  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

barriers   resulting  from  illegal  agreements   which   will  make   such 
competition  impracticable. 

Whether  a  particular  act,  contract,  or  agreement  was  a  reason- 
able and  normal  method  in  furtherance  of  trade  and  commerce  may, 
in  doubtful  cases,  turn  upon  the  intent  to  be  inferred  from  the 
extent  of  the  control  thereby  secured  over  the  commerce  affected, 
as  well  as  by  the  method  which  was  used.  Of  course,  if  the  neces- 
sary result  is  materially  to  restrain  trade  between  the  states,  the 
intent  with  which  the  thing  was  done  is  of  no  consequence.  But 
when  there  is  only  a  probability,  the  intent  to  produce  the  conse- 
quences may  become  important.  United  States  v.  Terminal  R. 
Asso.,  224  U.  S.  383,  394;  Swift  &  Co.  v.  United  States,  196  U.  S. 
375. 

In  the  present  case  the  extent  of  the  control  over  the  limited 
supply  of  anthracite  coal  by  means  of  the  great  proportion  there- 
tofore owned  or  controlled  by  the  defendant  companies,  and  the 
extent  of  the  control  acquired  over  the  independent  output  which 
constituted  the  only  competing  supply,  affords  evidence  of  an  intent 
to  suppress  that  competition,  and  of  a  purpose  to  unduly  restrain 
the  freedom  of  production,  transportation,  and  sale  of  the  article 
at  tide  water  markets. 

The  case  falls  well  within  not  only  the  Standard  Oil  and  Tobacco 
Cases,  221  U.  S.  1,  but  is  of  such  an  unreasonable  character  as  to 
be  within  the  authority  of  a  long  line  of  cases  decided  by  this 
court.  Among  them  we  may  cite:  Northern  Secur.  Co.v.  United 
States,  193  U.  S.  197;  Swift  &  Co.  v.  United  States,  196  U.  S.  375 ; 
National  Cotton  Oil  Co.  v.  Texas,  197  U.  S.  115;  United  States  v. 
Terminal  R.  Asso.,  224  U.  S.  383,  and  the  recent  case  of  United 
States  v.  Union  P.  R.  Co.,  226  U.  S.  61. 

We  are  thus  led  to  the  conclusion  that  the  defendants  did  com- 
bine for  two  distinct  purposes, — first,  by  and  through  the  instru- 
mentality of  the  Temple  Iron  Company,  with  the  object  of  prevent- 
ing the  construction  of  an  independent  and  competing  line  of  rail- 
way into  the  anthracite  region;  and,  second,  by  and  through  the 
instrumentality  of  the  65  per  cent,  contracts,  with  the  purpose 
and  design  of  controlling  the  sale  of  the  independent  output  at  tide 
water.  *  *  *  * 

(The  court  then  discusses  the  question  of  the  several  so-called 
"minor  combinations,"  such  as  the  acquisition  in  1901  of  a  control 
of  the  Central  Railroad  of  New  Jersey  by  the  Reading  Company 
and  holds  that  the  lower  court  was  guilty  of  no  error  in  refusing 
to  enjoin  these  transactions  since  they  were  not  proved  to  be  in 
furtherance  of  a  general  scheme  of  combination  between  all  the 
defendants.) 

The  opinion  continues  as  follows : 

The  decree  of  the  court  below  is  affirmed  as  to  the  Temple  Iron 
Company  combination.  It  is  reversed  as  to  the  65  per  cent,  con- 
tracts, and  the  case  will  be  remanded  with  direction  to  enter  a 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  137 

decree  canceling  each  of  these  contracts,  and  perpetually  enjoining 
their  further  execution  ,  and  for  such  proceedings  as  are  in  con- 
formity with  this  opinion. 

Note. — In  Eastern  States  Retail  Lumber  Dealers'  Association  v.  United 
States,  234  U.  S.  600  (decided  June  22nd,  1914),  the  Supreme  Court  decided 
that  the  concerted,  systematic,  and  periodic  circulation  by  associations  of 
retail  lumber  dealers,  among  their  members,  through  a  so-called  "official 
report,"  of  confidential  information  of  the  names  of  wholesale  lumber  dealers 
engaged  in  interstate  trade,  selling  directly  to  consumers,  violates  the  prohi- 
bitions of  the  Sherman  Anti-Trust  Act  as  a  conspiracy  in  restraint  of  trade 
between  the  States.  Even  though  each  retailer  belonging  to  the  association 
was  free  to  act  as  he  saw  fit,  nevertheless,  the  court  held  that  these  reports 
were  circulated  with  the  intention  and  effect  of  causing  the  retailers  to  with- 
hold their  patronage  from  the  listed  wholesalers,  and  thus  directly  and  appre- 
ciably impair  their  interstate  trade.  The  words  of  Mr.  Justice  Day,  deliver- 
ing the  opinion  of  the  court  in  this  case,  are  very  significant  when  applied 
to  cases  of  this  character.  He  says  (page  614)  :  "A  retail  dealer  has  the 
unquestioned  right  to  stop  dealing  with  a  wholesaler  for  reasons  sufficient  to 
himself,  and  may  do  so  because  he  thinks  such  dealer  is  acting  unfairly  in 
trying  to  undermine  his  trade.  'But,'  as  was  said  by  Mr.  Justice  Lurton, 
speaking  for  the  court  in  Grenada  Lumber  Co.  v.  Mississippi,  217  U.  S.  433, 
'when  the  plaintiffs  in  error  combine  and  agree  that  no  one  of  them  will 
trade  with  any  producer  or  wholesaler  who  shall  sell  to  a  consumer  within 
the  trade  range  of  any  of  them,  quite  another  case  is  presented.  An  act 
harmless  when  done  by  one  may  become  a  public  wrong  when  done  by  many 
acting  in  concert,  for  it  then  takes  on  the  form  of  a  conspiracy,  and  may 
be  prohibited  or  punished,  if  the  result  be  hurtful  to  the  public  or  to  the 
individual  against  whom  the  concerted  action  is  directed.'  When  the  retailer 
goes  beyond  his  personal  right,  and,  conspiring  and  combining  with  others 
of  like  purpose,  seeks  to  obstruct  the  free  course  of  interstate  trade  and 
commerce  and  to  unduly  suppress  competition  by  placing  obnoxious  wholesale 
dealers  under  the  coercive  influence  of  a  condemnatory  report  circulated 
among  others,  actual  or  possible  customers  of  the  offenders,  he  exceeds  his 
lawful  rights,  and  such  action  brings  him  and  those  acting  with  him  within 
the  condemnation  of  the  act  of  Congress." 

Note.— In  Hopkins  v.  United  States,  171  U.  S.  578.  The  members  of  the 
Kansas  City  Stock  Exchange  agreed  under  the  by-laws  of  their  organization 
to  transact  no  business  with  traders  who  were  not  members  of  their  associa- 
tion, and  further  to  charge  commissions  in  accordance  with  rates  fixed  by 
the  association.  The  members  bought  live  stock  shipped  into  the  State  from 
other  States  and  sold  the  same  not  only  to  the  large  packing  houses  in  Kansas 
City,  Missouri,  and  Kansas  City,  Kansas,  but  also  shipped  them  to  other 
outside  markets.  The  Government  sought  to  dissolve  the  exchange  on  the 
ground  that  it  was  a  combination  in  restraint  of  interstate  trade.  The 
Supreme  Court  held  that  the  local  business  of  buying  live  stock  at  stock  yards 
in  the  city  by  members  of  an  exchange  as  commission  merchants  is  not  inter- 
state commerce,  although  most  of  the  purchases  and  sales  are  made  in  other 
States,  and  therefore  not  contrary  to  Sherman  Anti-Trust  Law. 


138  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

5.     Criminal  Section  of  the  Sherman  Act. 

UNITED  STATES  v.  JAMES  A.  PATTEN,  ET  AL. 
COTTON  CORNER  CASE. 

226  U.  S.  525.     January  6,  1913. 

This  was  a  criminal  prosecution  under  the  Sherman  Anti-Trust 
Act,  in  which  the  defendants  were  charged  with  engaging  in  a 
conspiracy  in  restraint  of  trade.  It  was  alleged  that  the  defendants 
were  to  do  what  is  commonly  called  "running  a  corner  in  cotton/' 
The  court  analyzed  the  averments  in  the  counts  of  the  indictment 
as  follows: 

1.  The  conspirators  were    to  make  purchases  from  speculators 
upon  the  New  York  Cotton  Exchange  of  quantities  of  cotton  for 
future  delivery,  greatly  in  excess  of  the  amount  available  for  de- 
livery when  deliveries  should  become  due. 

2.  By  these  means  an  abnormal  demand  was  to  be  created  on 
the  part  of  such  sellers,  who  would  pay  excessive  prices  to  obtain 
cotton  for  delivery  upon  their  contracts. 

3.  The  excessive  prices  prevailing  upon  the  New  York  Exchange 
would  cause  similar  prices  to  exist  upon  other  cotton  markets. 

4.  As  a  necessary   and  unavoidable  result  of   their  acts,   said 
conspirators  were  to  compel  cotton  manufacturers  throughout  the 
country  to  pay  said  excessive  prices  to  obtain  cotton  for  their  needs, 
or  else  curtail  their  operations. 

The  defendants  demurred  to  the  indictment  on  the  ground  that 
it  did  not  set  forth  an  offense  within  the  meaning  of  the  criminal 
clause  of  the  Sherman  Act.  On  this  point  the  contention  of  the 
defendants  was  sustained  by  the  Circuit  Court,  whereupon  the 
Government  appealed  the  case  to  the  Supreme  Court. 

MR.  JUSTICE  VAN  DEVANTER  delivered  the  opinion  of  the  court. 

We  come,  then,  to  the  question  whether  a  conspiracy  to  run 
a  corner  in  the  available  supply  of  a  staple  commodity,  such  as 
cotton,  normally  a  subject  of  trade  and  commerce  among  the 
States,  and  thereby  to  enhance  artificially  its  price  throughout  the 
country,  and  to  compel  all  who  have  occasion  to  obtain  it  to  pay 
the  enhanced  price  or  else  to  leave  their  needs  unsatisfied,  is  within 
the  terms  of  section  1  of  the  Anti-Trust  Act,  which  makes  it  a 
criminal  offense  to  "engage  in"  a  "conspiracy  in  restraint  of  trade 
or  commerce  among  the  several  States."  The  Circuit  Court,  as  we 
have  seen,  answered  the  question  in  the  negative ;  and  this,  although 
accepting  as  an  allegation  of  fact,  rather  than  as  a  mere  economic 
theory  of  the  pleader,  the  statement  in  the  counts  that  interstate 
trade  and  commerce  would  necessarily  be  obstructed  by  the  opera- 
tion of4the  conspiracy.  The  reasons  assigned  for  the  ruling,  and 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  139 

now  pressed  upon  our  attention,  are  (1)  that  the  conspiracy  does 
not  belong  to  the  class  in  which  the  members  are  engaged  in  inter- 
state trade  or  commerce,  and  agree  to  suppress  competition  among 
themselves,  (2)  that  running  a  corner  instead  of  restraining  com- 
petition, tends,  temporarily  at  least,  to  stimulate  it,  and  (3)  that 
the  obstruction  of  interstate  trade  and  commerce  resulting  from 
the  operation  of  the  conspiracy,  even  although  a  necessary  result, 
would  be  so  indirect  as  not  to  be  a  restraint  in  the  sense  of  the 
statute. 

Upon  careful  reflection  we  are  constrained  to  hold  that  the  reasons 
given  do  not  sustain  the  ruling,  and  that  the  answer  to  the  question 
must  be  in  the  affirmative. 

Section  1  of  the  Act,  upon  which  the  counts  are  founded,  is  not 
confined  to  voluntary  restraints,  as  where  persons  engaged  in  inter- 
state trade  or  commerce  agree  to  suppress  competition  among 
themselves,  but  includes  as  well  involuntary  restraints;  as  where 
persons  not  so  engaged  conspire  to  compel  action  by  others,  or 
to  create  artificial  conditions,  which  necessarily  impede  or  burden 
the  due  course  of  such  trade  or  commerce,  or  restrict  the  common 
liberty  to  engage  therein.  Loewe  v.  Lawlor,  208  U.  S.  274. 

"The  context  manifests  that  the  statute  was  drawn  in  the  light 
of  the  existing  practical  conception  of  the  law  of  restraint  of  trade, 
because  it  groups  as  within  that  class,  not  only  contracts  which  were 
in  restraint  of  trade  in  the  subjective  sense,  but  all  contracts  or 
acts  which  theoretically  were  attempts  to  monopolize,  yet  which 
in  practice  have  come  to  be  considered  as  in  restraint  of  trade  in 
a  broad  sense." 

It  well  may  be  that  running  a  corner  tends  for  a  time  to  stimulate 
competition ;  but  this  does  not  prevent  it  from  being  a  forbidden 
restraint,  for  it  also  operates  to  thwart  the  usual  operation  of  the 
laws  of  supply  and  demand,  to  withdraw  the  commodity  from  the 
normal  current  of  trade,  to  enhance  the  price  artificially,  to  hamper 
users  and  consumers  in  satisfying  their  needs,  and  to  produce  prac- 
tically the  same  evils  as  does  the  suppression  of  competition. 

Of  course,  the  statute  does  not  apply  where  the  trade  or  com- 
merce affected  is  purely  intrastate.  Neither  does  it  apply,  as  this 
court  often  has  held,  where  the  trade  or  commerce  affected  is  inter- 
state, unless  the  effect  thereon  is  direct,  not  merely  indirect.  But 
no  difficulty  is  encountered  in  applying  these  tests  in  the  present 
case  when  its  salient  features  are  kept  in  view. 

It  was  a  conspiracy  to  run  a  corner  in  the  market.  The  com- 
modity to  be  cornered  was  cotton, — a  product  of  the  Southern 
States,  largely  used  and  consumed  in  the  Northern  States.  It  was 
a  subject  of  interstate  trade  and  commerce,  and  through  that  chan- 
nel it  was  obtained  from  time  to  time  by  the  many  manufacturers 
of  cotton  fabrics  in  the  Northern  States.  The  corner  was  to  be 
conducted  on  the  Cotton  Exchange  in  New  York  City,  but  by  means 


140  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

which  would  enable  the  conspirators  to  obtain  control  of  the  avail- 
able supply  and  to  enhance  the  price  to  all  buyers  in  every  market 
of  the  country.  This  control  and  the  enhancement  of  the  price 
were  features  of  the  conspiracy  upon  the  attainment  of  which  it  is 
conceded  its  success  depended.  Upon  the  corner  becoming  effective, 
there  could  be  no  trading  in  the  commodity  save  at  the  will  of  the 
conspirators  and  at  such  price  as  their  interests  might  prompt  them 
to  exact.  And  so,  the  conspiracy  was  to  reach  and  to  bring  within 
its  dominating  influence  the  entire  cotton  trade  of  the  country. 

As  we  are  of  opinion  that  the  statute  does  embrace  the  con- 
spiracy which  the  Circuit  Court  treated  as  charged  in  counts  seven 
and  eight,  as  construed  by  it,  its  judgment  upon  those  counts  is 
reversed  and  the  case  is  remanded  for  further  proceedings  in  con- 
formity with  this  opinion. 

Reversed  in  part. 

MR.  JUSTICE  LURTON  and  MR.  JUSTICE  HOLMES  dissenting. 


UNITED  STATES  v.  SIDNEY  W.  WINSLOW,  EDWARD  P. 

HURD,  GEORGE  W.  BROWN,  WILLIAM  BARBOUR, 

AND  ELMER  P.  HOWE. 

UNITED  SHOE  MACHINERY  COMPANY  CASE. 
227  U.  S.  202.     February  3,  1913. 

A  criminal  proceeding  under  the  Sherman  Anti-Trust  Act  was 
begun  by  the  United  States  government  against  the  defendants, 
Sidney  W.  Winslow,  Edward  P.  Hurd,  George  W.  Brown,  William 
Barbour  and  Elmer  P.  Howe,  in  the  District  Court  of  the  United 
States  for  the  District  of  Massachusetts.  The  facts  upon  which 
the  prosecution  was  based  were  as  follows : 

For  the  last  twenty-five  years  practically  all  the  shoes  worn  in 
the  United  States  have  been  made  by  the  help  of  machines,  grouped 
as  lasting  machines,  welt-sewing  machines,  and  outsole-stitching 
machines,  heeling  machines  and  metallic  fastening  machines,  there 
being  a  large  variety  of  machines  in  each  group.  (These  machines, 
of  course,  are  not  alleged  to  do  all  the  work  of  making  finished 
shoes.)  There  is  a  great  number  of  shoe  factories,  and  because  the 
machines  are  expensive  and  the  best  of  them  patented,  the  manu- 
facturers have  had  to  get  them  principally  from  the  defendants. 
Before  and  up  to  February  7,  1899,  the  defendants,  Winslow,  Hurd 
and  Brown,  through  the  Consolidated  and  McKay  Lasting  Machine 
Company,  under  letters  patent,  made  60  per  cent,  of  all  the  lasting 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  141 

machines  made  in  the  United  States;  the  defendants,  Barbour  and 
Howe,  through  the  Goodyear  Shoe  Machinery  Company,  in  like 
manner  made  80  per  cent,  of  all  the  welt-sewing  machines  and  out- 
sole-stitching  machines,  and  10  per  cent,  of  all  the  lasting  machines ; 
and  the  defendant,  Storrow  (against  whom  the  indictment  had  been 
dismissed),  through  the  McKay  Shoe  Manufacturing  Company, 
made  70  per  cent,  of  all  the  heeling  machines  and  80  per  cent.'  of 
all  the  metallic  fastening  machines  made  in  the  United  States.  The 
defendants  all  were  carrying  on  commerce  among  the  states  with 
such  of  the  shoe  manufacturers  as  are  outside  Massachusetts,  the 
state  where  the  defendants  made  their  machines. 

On  February  7,  1899,  the  three  groups  of  defendants  above 
named,  up  to  that  time  separate,  organized  the  United  Shoe  Ma- 
chinery Company,  and  turned  over  to  that  company  the  stocks  and 
business  of  the  several  corporations  that  they  respectively  controlled. 
The  new  company  now  makes  all  the  machines  that  had  been  made 
in  different  places,  at  a  single  new  factory  at  Beverly,  Massachusetts, 
and  directly,  or  through  subsidiary  companies,  carries  on  all  the 
commerce  among  the  states  that  had  been  carried  On  independently 
by  the  constituent  companies  before.  The  defendants  have  ceased 
to  sell  shoe  machinery  to  the  shoe  manufacturers.  Instead,  they 
only  let  machines,  and  on  the  condition  that  unless  the  shoe  manu- 
facturers use  only  machines  of  the  kinds  mentioned,  furnished  by 
the  defendants,  or  if  they  use  any  such  machines  furnished  by  other 
machinery  makers,  then  all  machines  let  by  the  defendants  shall  be 
taken  away.  This  condition  they  constantly  have  enforced.  The 
defendants  were  alleged  to  have  done  the  acts  recited  with  intent 
unreasonably  to  extend  their  monopolies,  rights,  and  control  over 
commerce  among  the  states;  to  enhance  the  value  of  the  same  at 
the  expense  of  the  public;  and  to  discourage  others  from  inventing 
and  manufacturing  machines  for  the  work  done  by  those  of  the 
defendants.  The  organization  of  the  new  company  and  the  turning 
over  of  the  stocks  and  business  to  it  were  \alleged  to  constitute  a 
breach  of  the  Sherman  act. 

The  lower  court  held  that  the  alleged  acts  were  not  a  violation 
of  the  anti-trust  law,  and  sustained  a  demurrer  to  the  indictment. 
An  appeal  was  then  taken  to  the  Supreme  Court. 

MR.  JUSTICE  HOLMES  delivered  the  opinion  of  the  court: 

The  district  court  construed  the  indictment  as  confined  to  the 
combination  of  February  7 ;  that  is,  simply  to  the  merger  of  the 
companies,  without  regard  to  the  leases  subsequently  made,  and 
we  have  no  jurisdiction  to  review  this  interpretation  of  the  indict- 
ment. United  States  v.  Patten,  January  6,  1913,  226  U.  S.  525. 
Hence  the  only  question  before  us  is  whether  that  combination,  taken 
by  itself,  was  within  the  penalties  of  the  Sherman  act.  The  val- 
idity of  the  leases,  or  of  a  combination  contemplating  them,  cannot 
be  passed  upon  in  this  case. 


142  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Thus,  limited,  the  question  does  not  require  lengthy  discussion, 
and  a  large  part  of  the  argument  addressed  to  us  concerned  matters 
not  open  here.  On  the  face  of  it  the  combination  was  simply  an 
effort  after  greater  efficiency.  The  business  of  the  several  groups 
that  combined,  as  it  existed  before  the  combination,  is  assumed  to 
have  been  legal.  The  machines  are  patented,  making  them  is  a  mon- 
opoly in  any  case,  the  exclusion  of  competitiors  from  the  use  of 
them  is  of  the  very  essence  of  the  right  conferred  by  the  patents, 
Paper  Bag  Patent  Case  (Continental  Paper  Bag  Co.  v.  Eastern 
Paper  Bag  Co.,)  210  U.  S.  405,  and  it  may  be  assumed  that  the 
success  of  the  several  groups  was  due  to  their  patents  having  been 
the  best.  As,  by  the  interpretation  of  the  indictment  below  and 
by  the  admission  in  argument  before  us,  they  did  not  compete  with 
one  another,  it  is  hard  to  see  why  the  collective  business  should  be 
any  worse  than  its  component  parts.  It  is  said  that  from  70  to  80 
per  cent,  of  all  the  shoe  machinery  business  was  put  into  a  single 
hand.  This  is  inaccurate,  since  the  machines  in  question  are  not 
alleged  to  be  types  of  all  the  machines  used  in  making  shoes,  and 
since  the  defendants'  share  in  commerce  among  the  states  does  not 
appear.  But  taking  it  as  true,  we  can  see  no  greater  objection  to 
one  corporation  manufacturing  70  per  cent,  of  three  non-competing 
groups  of  patented  machines  collectively  used  for  making  a  single 
product  than  to  three  corporations  making  the  same  proportion  of 
one  group  each.  The  disintegration  aimed  at  by  the  statute  does 
not  extend  to  reducing  all  manufacture  to  isolated  units  of  the 
lowest  degree.  It  is  as  lawful  for  one  corporation  to  make  every 
part  of  a  steam  engine,  and  to  put  the  machine  together,  as  it  would 
be  for  one  to  make  the  boilers  and  another  to  make  the  wheels. 
Until  the  one  intent  is  nearer  accomplishment  than  it  is  by  such  a 
juxtaposition  alone,  no  intent  could  raise  the  conduct  to  the  dig- 
nity of  an  attempt. 

Judgment  affirmed. 


Note.— On  February  17th,  1913,  the  United  States  District  Court  at  Cincin- 
nati, Ohio,  sentenced  John  H.  Patterson,  President  of  the  National  Cash 
Register  Company,  and  twenty-eight  other  officials  and  employees  of  the  said 
company  to  pay  fines  and  undergo  imprisonment  for  terms  varying  from  three 
months  to  one  year  for  violations  of  the  criminal  section  of  the  Sherman 
Anti-Trust  Law.  Appeals  were  taken  to  the  Circuit  Court  of  Appeals  on  a 
number  of  grounds,  one  being  that  the  Federal  Statute  of  Limitations  bars 
actions  under  the  criminal  section  after  three  years.  The  Government  had 
charged  the  defendants  with  acquiring  a  monopoly  by  an  unfair  system  of 
competition  whereby  they  drove  their  competitors  out  of  the  business.  It 
was  alleged  that  the  defendants  used  many  schemes  to  do  this,  such  as 
harassing  their  competitors  with  unfounded  patent  infringement  suits,  organ- 
izing cash  register  concerns  ostensibly  as  competitors  of  the  National,  but  in 
reality  as  instruments  for  use  in  gaining  the  confidence  and  obtaining  the 
business  secrets  of  competitors  and  putting  on  the  market  registers  of  inferior 
workmanship  which  on  the  surface  looked  like  those  of  their  competitors,  etc. 
The  indictment  charged  the  officers  of  the  National  Cash  Register  Company 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  143 

with  conspiring  to  restrain  the  interstate  business  of  its  competitors  on  the 
theory  that  there  was  a  generic  conspiracy  extending  over  twenty  years 
against  all  competitors,  which,  as  the  various  competitors  named  in  the 
indictment,  came  into  existence,  was  directed  against  them  specificly.  The 
Circuit  Court  of  Appeals  held  that  a  conviction  could  be  had  only  in  con- 
spiring in  restraint  of  the  trade  of  such  competitors  as  were  in  existence 
during  the  three  years  prior  to  the  finding  of  the  indictment,  and  there  could 
be  no  conviction  for  conspiring  against  the  competitors  who  ceased  to  exist 
more  than  three  years  prior  to  the  finding  of  the  indictment  or  for  the  generic 
conspiracy  so  far  as  it  existed  prior  to  the  three  years.  As  the  evidence 
failed  to  show  that  this  conspiracy  could  have  been  directed  against  some  of 
the  competitors  named  within  three  years  prior  to  the  indictment  for  the 
reason  that  some  of  them  had  ceased  to  exist  prior  thereto,  and  as  the  lower 
court  had  failed  to  give  specific  instructions  to  the  jury  that  the  defendants 
could  not  be  found  guilty  for  conspiring  against  competitors  who  had  ceased 
to  exist  before  the  period  of  limitations,  and  for  other  technical  reasons,  the 
judgment  of  the  lower  court  was  reversed  and  the  case  remanded  for  a  new 
trial.  Patterson  v.  United  States,  222  Fed.  599  (March  13th,  1915).  The 
Government  attempted  to  bring  this  decision  up  to  the  Supreme  Court  for 
review  on  a  petition  for  certiorari,  but  the  Supreme  Court  denied  the  petition 
on  June  14th,  1915.  This  in  effect  sustained  the  decision  of  the  Circuit  Court 
of  Appeals. 


6.     The  Federal  Taxing  Power  as  Affecting  Commerce. 

McCRAY  v.  UNITED  STATES. 
195  U.  S.,  27.     1904. 

This  case  arose  in  the  District  Court  of  the  United  States  for 
the  Southern  District  of  Ohio  and  was  an  action  brought  by  the 
United  States  against  Leo  W.  McCray  to  recover  a  penalty  of 
$50.00  for  a  violation  of  the  Acts  of  Congress  requiring  that  internal 
revenue  stamps  at  the  rate  of  10  cents  per  pound  be  affixed  to 
packages  of  oleomargarine,  artificially  colored  to  look  like  butter. 
The  Act  of  Congress  of  August  2,  1886,  after  defining  butter 
and  oleomargarine,  provided,  as  follows :  "That  upon  oleomargarine 
which  shall  be  manufactured  and  sold,  or  removed  for  consumption 
or  use  there  shall  be  assessed  and  collected  a  tax  of  two  cents  per 

pound,  to  be  paid  by  the  manufacturer  thereof The 

tax  levied  by  this  section  shall  be  represented  by  coupon  stamps," 
etc.  The  Act  of  May  9,  1902,  amended  the  foregoing  act  by  in- 
creasing the  tax  on  oleomargarine  from  two  to  ten  cents  per  pound, 
but  contained  this  proviso:  "Provided,  when  oleomargarine  is  free 
from  artificial  coloration  that  causes  it  to  look  like  butter  of  any 
shade  of  yellow,  the  said  tax  shall  be  one-fourth  of  one  cent  per 
pound." 


144  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

The  government  claimed  that  McCray  had  purchased  for  resale 
oleomargarine  colored  to  look  like  butter,  upon  which  there  were 
stamps  at  the  rate  of  one- fourth  of  a  cent  per  pound  only,  whereas 
there  should  have  been  stamps  at  the  rate  of  ten  cents  per  pound. 
McCray  made  answer,  admitting  the  purchase  for  resale  of  the  said 
oleomargarine,  but  asserted  that  while  it  was  true  that  the  product 
was  of  a  yellow  color,  yet  this  result  was  not  caused  by  artificial 
coloring,  but  was  solely  due  to  the  fact  that  the  butter  used  in 
making  the  oleomargarine  had  a  deep  yellow  color  imparted  to  it 
by  a  substance  known  as  Wells-Richardson  improved  butter  color, 
a  product  the  use  of  wrhich  in  butter  was  not  forbidden  by  the  gov- 
ernment. He  claimed  that  the  use  of  such  butter  did  not  amount 
to  an  artificial  coloration  of  the  oleomargarine,  itself,  within  the 
meaning  of  the  above  statute,  even  though  a  yellow  color  was  pro- 
duced in  the  oleomargarine.  But  the  principal  contention  of  Mc- 
Cray was  that  the  statutes  in  question  were  unconstitutional  be- 
cause they  deprived  him  of  his  property  without  due  process  of 
law,  inasmuch  as  the  tax  at  the  rate  of  ten  cents  per  pound  arbi- 
trarily discriminated  against  oleomargarine  in  favor  of  butter  to 
the  extent  of  destroying  the  oleomargarine  industry  for  the  benefit 
of  the  butter  industry. 

The  district  court  gave  judgment  in  favor  of  the  United  States 
from  which  decision  an  appeal  was  taken  directly  to  the  Supreme 
Court  because  of  the  importance  of  the  questions  involved,  arising 
under  the  Constitution. 

MR.  JUSTICE  WHITE  delivered  the  opinion  of  the  court: 

*  *  *  *  Leaving  out  of  view  the  proviso  to  the  8th  Section 
of  the  Act  of  1886  as  amended  and  re-enacted  by  the  3d  Section  of 
the  Act  of  1902,  it  is  beyond  question  that  a  tax  of  ten  cents  a  pound 
is  imposed  upon  oleomargarine.  As  the  product  was  admitted  by 
the  answer  to  be  oleomargarine,  it  follows  that  it  was  subject  to 
the  tax  of  10  cents  a  pound,  unless  by  the  proviso,  the  oleomargarine 
was  of  such  a  character  as  to  entitle  it  to  the  benefits  of  a  lower 
rate  of  taxation.  Now,  the  proviso  reads :  "Provided,  when  oleo- 
margarine is  free  from  artificial  coloration  that  causes  it  to  look  like 
butter  of  any  shade  of  yellow,  said  tax  shall  be  one-fourth  of  one 
cent  per  pound."  As  it  was  admitted  that  the  oleomargarine  was 
<of  a  shade  of  yellow  causing  it  to  look  like  butter,  and  as  it 
was  also  admitted  that  this  shade  of  yellow  had  been  imparted 
by  an  artificial  coloring  matter  used  to  color  the  butter  which 
formed  one  of  the  ingredients  from  which  the  oleomargarine  was 
manufactured,  it  results,  if  the  text  of  the  statute  be  applied  that 
the  oleomargarine  was  not  within  the  proviso  because  it  was  not 
free  from  artificial  coloring  matter  causing  it  to  look  like  butter. 
This  necessarily  follows,  since  the  right  to  enjoy  the  lower  rate  of 
tax  is  made  by  the  proviso  to  depend  upon  whether,  as  a  matter 
of  fact,  the  oleomargarine  was  free  from  artificial  coloring  matter, 
and  not  upon  the  mere  method  adopted  for  imparting  the  artificial 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  145 

color.  As  the  oleomargarine  in  question  was  in  fact  not  free  from 
artificial  coloration  we  think  that  a  construction  which  would  take 
it  out  of  the  general  rule  imposing  the  ten  cent  tax  upon  all  oleo- 
margarine, and  bring  it  within  the  exception  embracing  only  oleo- 
margarine free  from  artificial  coloration,  would  be  not  an  interpre- 
tation of  the  statute,  but  a  disregard  of  its  unambiguous  provisions. 
*  *  *  *  The  decisions  of  this  court  from  the  beginning  lend 
no  support  whatever  to  the  assumption  that  the  judiciary  may  re- 
strain the  exercise  of  lawful  power  on  the  assumption  that  a 
wrongful  purpose  or  motive  has  caused  the  power  to  be  exerted. 
As  we  have  previously  said,  from  the  beginning  no  case  can  be 
found  announcing  such  a  doctrine,  and  on  the  contrary,  the  doctrine 
of  a  number  of  cases  is  inconsistent  with  its  existence.  As  quite 
recently  pointed  out  by  this  court  in  Knowlton  v.  Moore,  178  U.  S. 
41,  the  often  quoted  statement  of  Chief  Justice  Marshall  in  M'Cul- 
loch  v.  Maryland,  4  Wheat.  316,  that  the  power  of  tax  is  the  power 
to  destroy,  affords  no  support  whatever  to  the  proposition  that 
where  there  is  a  lawful  power  to  impose  a  tax,  its  imposition  may 
be  treated  as  without  the  power  because  of  the  destructive  effect 
of  the  exertion  of  the  authority.  *  *  *  * 

Yet  again,  in  Veazie  Bank  v.  Fenno,  8  Wall.  533,  where  a  tax 
levied  by  Congress  on  the  circulating  notes  of  state  banks  was 
assailed  on  the  ground  that  the  tax  was  intended  to  destroy  the 
circulation  of  such  notes,  and  was,  besides,  the  exercise  of  a  power 
to  tax  a  subject  not  conferred  upon  Congress,  it  was  said,  as  to  the 
first  contention  (p.  548)  :  "It  is  insisted,  however,  that  the  tax  in 
the  case  before  us  is  excessive,  and  so  excessive  as  to  indicate  a 
purpose  on  the  part  of  Congress  to  destroy  the  franchise  of  the 
bank,  and  is,  therefore,  beyond  the  constitutional  power  of  Con- 
gress. The  first  answer  to  this  is  that  the  judicial  cannot  prescribe 
to  the  legislative  department  of  the  government  limitations  upon 
the  exercise  of  its  acknowledged  powers.  The  power  to  tax  may 
be  exercised  oppressively  upon  persons,  but  the  responsibility  of 
the  legislature  is  not  to  the  courts,  but  to  the  people  by  whom  its 
members  are  elected.  So,  if  a  particular  tax  bears  heavily  upon  a 
corporation  or  a  class  of  corporations,  it  cannot,  for  that  reason 
only  be  pronounced  contrary  to  the  Constitution."  *  *  *  * 

In  Treat  v.  White,  181  U.  S.  264,  referring  to  a  stamp  duty  levied 
by  Congress,  it  was  observed :  "The  power  of  Congress  in  this  di- 
rection is  unlimited.  It  does  not  come  within  the  province  of 
this  court  to  consider  why  agreements  to  sell  shall  be  subject  to  the 
stamp  duty,  and  agreements  to  buy,  not.  It  is  enough  that  Congress, 
in  this  legislation,  has  imposed  a  stamp  duty  upon  one  and  not  upon 
the  other." 

It  being  thus  demonstrated  that  the  motive  or  purpose  of  Con- 
gress in  adopting  the  acts  in  question  may  not  be  inquired  into, 
we  are  brought  to  consider  the  contentions  relied  upon  to  show 
that  the  acts  assailed  were  beyond  the  power  of  Congress,  putting 
entirely  out  of  view  all  considerations  based  upon  purpose  or  mo- 

-  to 

•••.  IIJ/M     or 


146  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

tive.  *  *  *  *  Since,  as  pointed  out  in  all  the  decisions  re- 
ferred to,  the  taxing  power  conferred  by  the  Constitution  knows 
no  limits  except  those  expressly  stated  in  that  instrument,  it  must 
follow,  if  a  tax  be  within  the  lawful  power,  the  exertion  of  that 
power  may  not  be  judicially  restrained  because  of  the  results  to 
arise  from  its  exercise.  *  *  *  * 

The  proposition  that  where  a  tax  is  imposed  which  is  within  the 
grant  of  powers,  and  which  does  not  conflict  with  any  express  con- 
stitutional limitation,  the  courts  may  hold  the  tax  to  be  void  be- 
cause it  is  deemed  that  the  tax  is  too  high,  is  absolutely  disposed  of 
by  the  opinions  in  the  cases  hitherto  cited,  and  which  expressly  hold, 
to  repeat  again  the  language  of  one  of  the  cases  (Spencer  v.  Mer- 
chant) that  "The  judicial  department  cannot  prescribe  to  the  legis- 
lative department  limitations  upon  the  exercise  of  its  acknowledged 
powers.  The  power  to  tax  may  be  exercised  oppressively  upon 
persons ;  but  the  responsibility  of  the  legislature  is  not  to  the  courts, 
but  to  the  people  by  whom  its  members  are  elected." 

Whilst  undoubtedly  both  the  5th  and  10th  Amendments  qualify 
in  so  far  as  they  are  applicable,  all  the  provisions  of  the  Consti- 
tution, nothing  in  those  amendments  operates  to  take  away  the 
grant  of  power  to  tax  conferred  by  the  Constitution  upon  Congress. 
The  contention  on  this  subject  rests  upon  the  theory  that  the  pur- 
pose and  motive  of  Congress  in  exercising  its  undoubted  powers 
may  be  inquired  into  by  the  courts,  and  the  proposition  is  there- 
fore disposed  of  by  what  has  been  said  on  that  subject. 

The  right  of  Congress  to  tax  within  its  delegated  power  being 
unrestrained,  except  as  limited  by  the  Constitution,  it  was  within 
the  authority  conferred  on  Congress  to  select  the  objects  upon 
which  an  excise  should  be  laid.  It  therefore  follows,  that  in  ex- 
erting its  power,  no  want  of  due  process  of  law  could  possibly  re- 
sult, because  that  body  chose  to  impose  an  excise  on  artificially  col- 
ored oleomargarine  and  not  upon  natural  butter  artificially  colored. 
The  judicial  power  may  not  usurp  the  functions  of  the  legislative 
in  order  to  control  that  branch  of  the  government  in  the  performance 
of  its  lawful  duties.  This  was  aptly  pointed  out  in  the  extract  here- 
tofore made  from  the  opinion  in  Treat  v.  White,  181  U.  S.  264. 

Let  us  concede  that  if  a  case  was  presented  where  the  abuse 
of  the  taxing  power  was  so  extreme  as  to  be  beyond  the  principles 
which  we  have  previously  stated,  and  where  it  was  plain  to  the 
judicial  mind  that  the  power  had  been  called  into  play,  not  for 
revenue,  but  solely  for  the  purpose  of  destroying  rights  which 
could  not  be  rightfully  destroyed  consistently  with  the  principles 
of  freedom  and  justice  upon  which  the  constitution  rests,  that  it 
would  be  the  duty  of  the  courts  to  say  that  such  an  arbitrary  act 
was  not  merely  an  abuse  of  a  delegated  power,  but  was  the  exercise 
of  an  authority  not  conferred.  This  concession,  however,  like  the 
one  previously  made,  must  be  without  influence  upon  the  decision 
of  this  cause  for  the  reasons  previously  stated ;  that  is,  that  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  147 

manufacture  of  artificially  colored  oleomargarine  may  be  prohibited 
by  a  free  government  without  a  violation  of  fundamental  rights. 

Affirmed. 

THE  CHIEF  JUSTICE,  MR.  JUSTICE  BROWN,  and  MR.  JUSTICE  PECK- 
HAM  dissent. 


7.     The  Federal  Police  Power  as  Affecting  Commerce. 

THE  EMPLOYERS'  LIABILITY  CASE. 
MONDOU  v.  NEW  YORK,  NEW  HAVEN,  AND  HARTFORD 

RAILROAD  COMPANY. 

i 

223  U.  S.  1.     January  15,  1912. 

Four  cases  were  brought  upon  writs  of  error  to  the  Supreme  Court 
of  the  United  States  to  test  the  constitutionality  of  the  Federal  Em- 
ployers' Liability  Act  of  April  22,  1908,  amended  by  the  Act  of 
April  5,  1910.*  The  case  of  Edgar  G.  Mondou  against  the  New 
York,  New  Haven,  and  Hartford  Railroad  Company  was  instituted 
in  one  of  the  Superior  Courts  of  the  State  of  Connecticut  to  recover 
for  personal  injuries  suffered  by  Mondou,  a  locomotive  fireman, 
while  in  the  employ  of  the  defendant  railroad  company, — a  common 
carrier  engaged  in  commerce  between  some  of  the  States.  The  in- 
juries proximately  resulted  from  the  negligence  of  Mondou's  fellow 
servants,  also  in  the  employ  of  the  defendant  company,  and  the  right 
to  be  compensated  for  the  injuries  received  was  based  solely  on  the 
Act  of  Congress  of  April  22,  1908,  which  prescribed  the  liability  of 
common  carriers  to  their  employees.  The  railroad  company  claimed 
that  Congress  had  exceeded  "its  power  to  regulate  commerce  by  such 
legislation,  that  the  acts  therefore  were  repugnant  to  the  Constitu- 
tion, and  even  if  the  acts  were  valid,  the  suit  to  enforce  them  could 
not  be  brought  in  a  State  court."  The  other  cases  presented  sub- 
stantially the  same  questions,  and  were  considered  and  decided  as  one 
with  the  Mondov  case.  They  were  as  follows :  Bessie  Babcock,  Ad- 
ministratrix v.  Northern  Pacific  Railway  Company,  an  action  com- 
menced in  the  Circuit  Court  of  the  United  States  for  the  District  of 
Minnesota,  which  was  decided  against  the  railway  company;  Mary 
A.  Walsh,  Administratrix,  v.  New  York,  New  Haven,  and  Hartford 


Note.— The  Acts  of  Congress  of  April  22,  1908,  and  April  5,  1910,  known 
as  "The  Federal  Employers'  Liability  Act,"  are  contained  in  the  Appendix. 


148  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Railroad  Company,  and  New  York,  New  Haven,  and  Hartford  Rail- 
road Company  v.  Mary  A.  Walsh,  Administratrix,  which  were  cross 
writs  of  error  in  the  same  case,  arising  in  the  Circuit  Court  of  the 
United  States  for  the  District  of  Massachusetts,  and  taken  to  the 
Supreme  Court  to  review  a  decision  which  was  partly  in  favor  of 
and  partly  against  each  party  to  the  litigation. 

MR.  JUSTICE  VAN  DEVANTER,  after  stating  the  cases  as  above, 
delivered  the  opinion  of  the  court. 

The  principal  questions  presented  in  these  cases  as  discussed  at  the 
bar  and  in  the  briefs  are:  1.  May  Congress,  in  the  exertion  of  its 
power  over  interstate  commerce,  regulate  the  relations  of  common 
carriers  by  railroad  and  their  employees  while  both  are  engaged  in 
such  commerce  ?  2.  Has  Congress  exceeded  its  power  in  that  regard 
by  prescribing  the  regulations  which  are  embodied  in  the  act  in 
question  ?  3.  Do  those  regulations  supercede  the  laws  of  the  states 
in  so  far  as  the  latter  cover  the  same  field?  4.  May  rights  arising 
under  those  regulations  be  enforced,  as  of  right,  in  the  courts  of  the 
States  when  their  jurisdiction,  as  fixed  by  local  laws,  is  adequate  to 
the  occasion  ? 

The  clauses  in  the  Constitution  (Art.  I,  §  8,  Clauses  3  and  18) 
which  confer  upon  Congress  the  power  "to  regulate  commerce  .  .  . 
among  the  several  States,"  and  "to  make  all  laws  which  shall  be 
necessary  and  proper"  for  the  purpose,  have  been  considered  by 
this  court  so  often  and  in  such  varied  connections  that  some  propo- 
sitions bearing  upon  the  extent  and  nature  of  this  power  have  come 
to  be  so  firmly  settled  as  no  longer  to  be  open  to  dispute,  among  them 
being  these : 

1.  The  term  "commerce"  comprehends  more  than  the  mere  ex- 
change of  goods.     It  embraces  commercial  intercourse  in  all  its 
branches,  including  transportation  of  passengers  and  property  by 
common  carriers,  whether  carried  on  by  water  or  by  land. 

2.  The  phrase  "among  the  several  States"  marks  the  distinction, 
for  the  purpose  of   governmental   regulation,   between   commerce 
which  concerns  two  or  more  States  and  commerce  which  is  confined 
to  a  single  State  and  does  not  affect  other  States, — the  power  to 
regulate  the  former  being  conferred  upon  Congress  and  the  regula- 
tion of  the  latter  remaining  with  the  States  severally. 

3.  "To  regulate,"  in  the  sense  intended,  is  to  foster,  protect,  con- 
trol, and  restrain,  with  appropriate  regard  for  the  welfare  of  those 
who  are  immediately  concerned  and  of  the  public  at  large. 

4.  This  power  over  commerce  among  the  States,  so  conferred 
upon  Congress,  is  complete  in  itself,  extends  incidentally  to  every 
instrument  and  agent  by  which  such  commerce  is  carried  on,  may 
be  exerted  to  its  utmost  extent  over  every  part  of  such  commerce, 
and  is  subject  to  no  limitations  save  such  as  are  prescribed  in  thl 
Constitution.     But,  of  course,  it  does  not  extend  to  any  matter  or 
thing  which  does  not  have  a  real  or  substantial  relation  to  some 
part  of  such  commerce. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  149 

5.  Among  the  instruments  and  agents  to  which  the  power  extends 
are  the  railroads  over  which  transportation  from  one  State  to  an- 
other is  conducted,  the  engines  and  cars  by  which  such  transporta- 
tion is  effected,  and  all  who  are  in  any  wise  engaged  in  such  trans- 
portation, whether  as  common  carriers  or  as  their  employees. 

6.  The  duties  of  common  carriers  in  respect  of  the  safety  of  their 
employees,  while  both  are  engaged  in  commerce  among  the  States, 
and  the  liability  of  the  former  for  injuries  sustained  by  the  latter, 
while  both  are  so  engaged,  have  a  real  or  substantial  relation  to  such 
commerce,  and  therefore  are  within  the  range  of  this  power.  *  *  * 

In  view  of  these  settled  propositions,  it  does  not  admit  of  doubt 
that  the  answer  to  the  first  of  the  questions  before  stated  must  be 
that  Congress,  in  the  exertion  of  its  power  over  interstate  com- 
merce, may  regulate  the  relations  of  common  carriers  by  railroad 
and  their  employees,  while  both  are  engaged  in  such  commerce,  sub- 
ject always  to  the  limitations  prescribed  in  the  Constitution,  and  to 
the  qualification  that  the  particulars  in  which  those  relations  are 
regulated  must  have  a  real  or  substantial  connection  with  the  inter- 
state commerce  in  which  the  carriers  and  their  employees  are  en- 
gaged. 

We  come,  then,  to  inquire  whether  Congress  has  exceeded  its 
power  in  that  regard  by  prescribing  the  regulations  embodied  in  the 
present  act.  It  is  objected  that  it  has,  (1)  because  the  abrogation  of 
the  fellow-servant  rule,  the  extension  of  the  carrier's  liability  to  cases 
of  death,  and  the  restriction  of  the  defenses  of  contributory  negli- 
gence and  assumption  of  risk,  have  no  tendency  to  promote  the  safety 
of  the  employees,  or  to  advance  the  commerce  in  which  they  are 
engaged ;  (2)  because  the  liability  imposed  for  injuries  sustained  by 
one  employee  through  the  negligence  of  another,  although  confined 
to  instances  where  the  injured  employee  is  engaged  in  interstate  com- 
merce, is  not  confined  to  instances  where  both  employees  are  so  en- 
gaged;  and  (3)  because  the  act  offends  against  the  Fifth  Amend- 
ment to  the  Constitution  (a)  by  unwarrantably  interfering  with  the 
liberty  of  contract,  and  (b)  by  arbitrarily  placing  all  employers  en- 
gaged in  interstate  commerce  by  railroad  in  a  disfavored  class,  and 
all  their  employees  engaged  in  such  commerce  in  a  favored  class. 

Briefly  stated,  the  departure  from  the  common  law  made  by  the 
portions  of  the  act  against  which  the  first  objection  is  leveled  are 
these:  (a)  The  rule  that  the  negligence  of  one  employee  resulting  in 
injury  to  another  was  not  to  be  attributed  to  their  common  employer 
is  displaced  by  a  rule  imposing  upon  the  employer  responsibility  for 
such  an  injury,  as  was  done  at  common  law  when  the  injured  per- 
son was  not  an  employee;  (b)  the  rule  exonerating  an  employer 
from  liability  for  injury  sustained  by  an  employee  through  the  con- 
curring negligence  of  the  employer  and  the  employee  is  abrogated 
in  all  instances  where  the  employer's  violation  of  a  statute  enacted 
for  the  safety  of  his  employees  contributes  to  the  injury,  and  in 
other  instances  is  displaced  by  the  rule  of  comparative  negligence, 
whereby  the  exoneration  is  only  from  a  proportional  part  of  the 


150  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

damages  corresponding  to  the  amount  of  negligence  attributable  to 
the  employee;  (c)  the  rule  that  an  employee  was  deemed  to  assume 
the  risk  of  injury,  even  if  due  to  the  employer's  negligence,  where 
the  employee  voluntarily  entered  or  remained  in  the  service  with  an 
actual  or  presumed  knowledge  of  the  conditions  out  of  which  the 
risk  arose,  is  abrogated  in  all  instances  where  the  employer's  viola- 
tion of  a  statute  enactdd  for  the  safety  of  his  employees  contributed 
to  the  injury;  and  (d)  the  rule  denying  a  right  of  action  for  the 
death  of  one  person,  caused  by  the  wrongful  act  or  englect  of  an- 
other, is  displaced  by  a  rule  vesting  such  a  right  of  action  in  the  per- 
sonal representatives  of  the  deceased,  for  the  benefit  of  designated 
relatives. 

Of  the  objection  to  these  changes  it  is  enough  to  observe: 

First.  "A  person  has  no  property,  no  vested  interest,  in  any 
rule  of  the  common  law.  That  is  only  one  of  the  forms  of  muni- 
cipal law,  and  is  no  more  sacred  than  any  other.  Rights  of  prop- 
erty which  have  been  created  by  the  common  law  cannot  be  taken 
away  without  due  process ;  but  the  law  itself,  as  a  rule  of  conduct, 
may  be  changed  at  the  will  ...  of  the  legislature,  unless  pre- 
vented by  constitutional  limitations.  Indeed,  the  great  office  of 
statutes  is  to  remedy  defects  in  the  common  law  as  they  are  de- 
veloped, and  to  adapt  it  to  the  changes  of  time  and  circumstances." 
Munn  v.  Illinois,  94  U.  S.  113;  Martin  v.  Pittsburgh  &  L.  E.  R.  Co., 
203  U.  S.  284;  Western  U.  Teleg.  Co.  v.  Commercial  Mill.  Co., 
218  U.  S.  406. 

Second.  The  natural  tendency  of  the  changes  described  is  to 
impel  the  carriers  to  avoid  or  prevent  the  negligent  acts  and  omis- 
sions which  are  made  the  bases  of  the  rights  of  recovery  which  the 
statute  creates  and  defines;  and  as  whatever  makes  for  that  end 
tends  to  promote  the  safety  of  the  employees  and  to  advance  the 
commerce  in  which  they  are  engaged,  we  entertain  no  doubt  that  in 
making  those  changes  Congress  acted  within  the  limits  of  the  dis- 
cretion confided  to  it  by  the  Constitution.  Lottery  Case  (Champion 
v.  Ames),  188  U.  S.  321;  Atlantic  Coast  Line  R.  Co.  v.  Riverside 
Mills,  219  U.  S.  186. 

We  are  not  unmindful  that  that  end  was  being  measurably  at- 
tained through  the  remedial  legislation  of  the  several  states,  but 
that  legislation  has  been  far  from  uniform,  and  it  undoubtedly  rested 
with  Congress  to  determine  whether  a  national  law,  operating  uni- 
formly in  all  the  States,  upon  all  carriers  by  railroad  engaged  in 
interstate  commerce,  would  better  subserve  the  needs  of  that  com- 
merce. The  Lottawanna  (Rodd  v.  Heartt),  21  Wall.  558;  Balti- 
more &  O.  R.  Co.,  v.  Baugh,  149  U.  S.  368. 

The  second  objection  proceeds  upon  the  theory  that,  even  although 
Congress  has  power  to  regulate  the  liability  of  a  carrier  for  injuries 
sustained  by  one  employee  through  the  negligence  of  another,  where 
all  are  engaged  in  interstate  commerce,  that  power  does  not  embrace 
instances  where  the  negligent  employee  is  engaged  in  intrastate  com- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  151 

merce.  But  this  is  a  mistaken  theory,  in  that  it  treats  the  source 
of  the  injury,  rather  than  its  effect  upon  interstate  commerce,  as  the 
criterion  of  congressional  power.  As  was  said  in  Southern  R.  Co.  v. 
United  States,  222  U.  S.  20,  that  power  is  plenary,  and  competently 
may  be  exerted  to  secure  the  safety  of  interstate  transportation  and 
of  those  who  are  employed  therein,  no  matter  what  the  source  of  the 
dangers  which  threaten  it.  The  present  act,  unlike  the  one  con- 
demned in  Employers'  Liability  Cases  (Howard  v.  Illinois  C.  R. 
Co.),  207  U.  S.  463,  deals  only  with  the  liability  of  a  carrier  engaged 
in  interstate  commerce  for  injuries  sustained  by  its  employees  while 
engaged  in  such  commerce.  And  this  being  so,  it  is  not  a  valid  ob- 
jection that  the  act  embraces  instances  where  the  causal  negligence 
is  that  of  an  employee  engaged  in  intrastate  commerce;  for  such 
negligence,  when  operating  injuriously  upon  an  employee  engaged 
in  interstate  commerce,  has  the  same  effect  upon  that  commerce  as 
if  the  negligent  employee  were  also  engaged  therein. 

Next  in  order  is  the  objection  that  the  provision  in  Section  5, 
declaring  void  any  contract,  rule,  regulation,  or  device,  the  purpose 
or  intent  of  which  is  to  enable  a  carrier  to  exempt  itself  from  the 
liability  which  the  act  creates,  is  repugnant  to  the  Fifth  Amendment 
to  the  Constitution  as  an  unwarranted  interference  with  the  liberty 
of  contract.  But  of  this  it  suffices  to  say,  in  view  of  our  recent 
decisions  in  Chicago,  B.  &  Q.  R.  Co.  v.  McGuire,  219  U.  S.  549,  and 
Baltimore  &  O.  R.  Co.  v.  Interstate  Commerce  Commission,  221  U. 
S.  612,  that  if  Congress  possesses  the  power  to  impose  that  liability, 
which  we  here  hold  that  it  does,  it  also  possesses  the  power  to  insure 
its  efficacy  by  prohibiting  any  contract,  rule,  regulation,  or  device 
in  evasion  of  it. 

It  follows  that  the  answer  to  the  second  of  the  questions  before 
stated  must  be  that  Congress  has  not  exceeded  its  power  by  pre- 
scribing the  regulations  embodied  in  the  present  act. 

The  third  question,  whether  those  regulations  supersede  the  laws 
of  the  States  in  so  far  as  the  latter  cover  the  same  field,  finds  its 
answer  in  the  following  extracts  from  the  opinion  of  Chief  Justice 
Marshall  in  M'Culloch  v.  Maryland,  4  Wheat.  316,  4  L.  ed.  579: 

(P.  405)  "If  any  one  proposition  could  command  the  universal 
assent  of  mankind,  we  might  expect  it  would  be  this, — that  the  gov- 
ernment of  the  Union,  though  limited  in  its  powers,  is  supreme  with- 
in its  sphere  of  action.  This  would  seem  to  result  necessarily  from 
its  nature.  It  is  the  government  of  all ;  its  powers  are  delegated 
by  all;  it  represents  all,  and  acts  for  all.  Though  any  one  State 
may  be  willing  to  control  its  operations,  no  State  is  willing  to  allow 
others  to  control  them.  The  nation,  on  those  subjects  on  which 
it  can  act,  must  necessarily  bind  its  component  parts.  But  this  ques- 
tion is  not  left  to  mere  reason:  the  people  have,  in  express  terms, 
decided  it,  by  saying,  'this  Constitution,  and  the  laws  of  the  United 
States  which  shall  be  made  in  pursuance  thereof,'  'shall  be  the  su- 
preme law  of  the  land,'  and  by  requiring  that  the  members  of  the 


152  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

state  legislatures,  and  the  officers  of  the  executive  and  judicial 
departments  of  the  States,  shall  take  the  oath  of  fidelity  to  it.  The 
government  of  the  United  States,  then,  though  limited  in  its  powers, 
is  supreme;  and  its  laws,  when  made  in  pursuance  of  the  Constitu- 
tion, form  the  supreme  law  of  the  land,  'anything  in  the  Constitution 
or  laws  of  any  State  to  the  contrary  notwithstanding.'  *  *  *  * 

'The  £rant  of  power  to  Congress  in  the  Constitution  to  regulate 
commerce  with  foreign  nations  and  among  the  several  States,  it  is 
conceded,  is  paramount  over  all  legislative  powers  which,  in  conse- 
quence of  not  having  been  granted  to  Congress,  are  reserved  to  the 
States.  It  follows  that  any  legislation  of  a  State,  although  in  pur- 
suance of  an  acknowledged  power  reserved  to  it,  which  conflicts  with 
the  actual  exercise  of  the  power  of  Congress  over  the  subject  of 
commerce,  must  give  way  before  the  supremacy  of  the  national 
authority." 

True,  prior  to  the  present  act,  the  laws  of  the  several  States  were 
regarded  as  determinative  of  the  liability  of  employers  engaged  in 
interstate  commerce  for  injuries  received  by  their  employees  while 
engaged  in  such  commerce.  But  that  was  because  Congress,  al- 
though empowered  to  regulate  that  subject,  has  not  acted  thereon, 
and  because  the  subject  is  one  which  falls  within  the 
police  power  of  the  States  in  the  absence  of  action  by  Con- 
gress. *  *  *  *  And  now  that  Congress  has  acted,  the  laws  of 
the  States,  in  so  far  as  they  cover  the  same  field,  are  superseded, 
for  necessarily  that  which  is  not  supreme  must  yield  to  that  which  is. 

We  come  next  to  consider  whether  rights  arising  under  the  con- 
gressional act  may  be  enforced,  as  of  right,  in  the  courts  of  the 
States  when  their  jurisdiction,  as  prescribed  by  local  laws,  is  ade- 
quate to  the  occasion.  The  first  of  the  cases  now  before  us  was 
begun  in  one  of  the  superior  courts  of  the  State  of  Connecticut, 
and,  in  that  case,  the  Supreme  Court  of  Errors  of  the  State  answered 
the  question  in  the  negative.  *  *  *  * 

We  are  quite  unable  to  assent  to  the  view  that  the  enforcement  of 
the  rights  which  the  congressional  act  creates  was  originally  intended 
to  be  restricted  to  the  Federal  courts.  The  act  contains  nothing 
which  is  suggestive  of  such  a  restriction,  and  in  this  situation  the 
intention  of  Congress  was  reflected  by  the  provision  in  the  general 
jurisdictional  act,  "That  the  Circuit  Courts  of  the  United  States  shall 
have  original  cognizance,  concurrent  with  the  courts  of  the  several 
States,  of  all  suits  of  a  civil  nature,  at  common  law  or  in  equity, 
where  the  matter  in  dispute  exceeds,  exclusive  of  interest  and  costs, 
the  sum  or  value  of  two  thousand  dollars,  and  arising  under  the  Con- 
stitution or  laws  of  the  United  States.  *  *  *  *  This  is  empha- 
sized by  the  amendment  engrafted  upon  the  original  act  in  1910,  to 
the  effect  that  "the  jurisdiction  of  the  courts  of  the  United  States 
under  this  act  shall  be  concurrent  with  that  of  the  courts  of  the  sev- 
eral States,  and  no  case  arising  under  this  act,  and  brought  in  any 
State  court  of  competent  jurisdiction,  shall  be  removed  to  any  court 
of  the  United  States."  The  amendment,  as  appears  by  its  language, 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  153 

instead  of  granting  jurisdiction  to  the  state  courts,  presupposes  that 
they  already  possessed  it. 

The  suggestion  that  the  Act  of  Congress  is  not  in  harmony  with 
the  policy  of  the  State,  and  therefore  that  the  courts  of  the  State 
are  free  to  decline  jurisdiction,  is  quite  inadmissible,  because  it  pre- 
supposes what  in  legal  contemplation  does  not  exist.  When  Con- 
gress, in  the  exertion  of  the  power  confided  to  it  by  the  Constitution, 
adopted  that  act,  it  spoke  for  all  the  people  and  all  the  States,  and 
thereby  established  a  policy  for  all.  That  policy  is  as  much  the 
policy  of  Connecticut  as  if  the  act  had  emanated  from  its  own  leg- 
islature, and  should  be  respected  accordingly  in  the  courts  of  the 
State.  *  *  *  * 

We  are  not  disposed  to  believe  that  the  exercise  of  jurisdiction 
by  the  State  courts  will  be  attended  by  any  appreciable  inconvenience 
or  confusion ;  but,  be  this  as  it  may,  it  affords  no  reason  for  declin- 
ing a  jurisdiction  conferred  by  law.  The  existence  of  the  juris- 
diction creates  an  implication  of  duty  to  exercise  it,  and  that  its  ex- 
ercise may  be  onerous  does  not  militate  against  that  implication. 
Besides,  it  is  neither  new  nor  unusual  in  judicial  proceedings  to 
apply  different  rules  of  law  to  different  situations  and  subjects, 
even  although  possessing  some  elements  of  similarity,  as  where  the 
liability  of  a  public  carrier  for  personal  injuries  turns  upon  whether 
the  injured  person  was  a  passenger,  an  employee,  or  a  stranger. 
But  it  never  has  been  supposed  that  courts  are  at  liberty  to  decline 
cognizance  of  cases  of  a  particular  class  merely  because  the  rules 
of  law  to  be  applied  in  their  adjudication  are  unlike  those  applied  in 
other  cases. 

We  conclude  that  rights  arising  under  the  act  in  question  may  be 
enforced,  as  of  right,  in  the  courts  of  the  States  when  their  juris- 
diction, as  prescribed  by  local  laws,  is  adequate  to  the  occasion. 

(The  court  reversed  the  Mondou  case,  and  sustained  the  judg- 
ments in  the  other  three  so  as  to  uphold  the  act.) 

Note. — See  Champion  vs.  Ames,  page  91,  for  another  example  of  Federal 
police  power,   as   affecting   interstate   commerce. 

8.     The  Patent  and   Copyright   Clause   as  Affecting   Commerce   and   Price 

Fixing. 

The  Constitution  in  Article  I,  Section  9,  provides  that  "Congress 
shall  have  power  to  promote  the  progress  of  science  and  useful  arts, 
by  securing  for  limited  times  to  authors  and  inventors  the  exclusive 
right  to  their  respective  writings  and  discoveries." 

SIDNEY  HENRY,  ET  AL.,  v.  A.  B.  DICK  COMPANY. 
224  U.  S.  1.     March  11,  1912. 

The  complainant,  the  A.  B.  Dick  Company,  brought  an  action 
for  the  infringement  of  two  letters  patent,  owned  by  it,  covering  a 


154  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

stencil-duplicating  machine  known  as  the  "Rotary  Mimeograph." 
The  Dick  Company  sold  to  Miss  Christina  B.  Skou,  of  New  York, 
a  Rotary  Mimeograph  embodying  the  invention  described  and 
claimed  in  said  patents,  under  a  license  which  was  attached  to  said 
machine,  as  follows: 

"LICENSE  RESTRICTION. — This  machine  is  sold  by  the  A.  B.  Dick 
Company  with  the  license  restriction  that  it  may  be  used  only  with 
the  stencil  paper,  ink,  and  other  supplies  made  by  A.  B.  Dick  Com- 
pany, Chicago,  U.  S.  A." 

The  defendant,  Sidney  Henry,  sold  to  Miss  Skou  a  can  of  ink 
suitable  for  use  on  said  mimeograph,  with  knowledge  of  the  said 
license  agreement,  and  with  the  expectation  that  it  would  be  used 
in  connection  with  said  mimeograph.  The  ink  sold  to  Miss  Skou 
was  not  covered  by  the  claims  of  said  patents.  Upon  the  facts 
above  set  forth  the  U.  S.  Circuit  Court  of  Appeals  for  the  Second 
District  desired  the  instruction  of  the  Supreme  Court  and  certified 
to  the  Supreme  Court  the  following  question:  "Did  the  acts  of 
the  defendants  constitute  contributory  infringement*  of  the  com- 
plainant's patents  ?" 

MR.  JUSTICE  LURTON  delivered  the  opinion  of  the  court. 

*  *  *  *  That  the  license  agreement  constitutes  a  contract 
not  to  use  the  machine  in  a  prohibited  manner  is  plain.  That  de- 
fendants might  be  sued  upon  the  broken  contract,  or  for  its  en- 
forcement, or  for  the  forfeiture  of  the  license,  is  likewise  plain. 
But  if,  by  use  of  the  machine  in  a  prohibited  way,  Miss  Skou  in- 
fringed the  patent,  then  she  is  also  liable  to  an  action  under  the 
patent  law  for  infringement.  *  *  *  * 

The  property  right  to  a  patented  machine  may  pass  to  a  purchaser 
with  no  right  of  use,  or  with  only  the  right  to  use  in  a  specified 
way,  or  at  a  specified  place,  or  for  a  specified  purpose.  The  un- 
limited right  of  exclusive  use  which  is  possessed  by  and  guaranteed 
to  the  patentee  will  be  granted  if  the  sale  be  unconditional.  But 
if  the  right  of  use  be  confined  by  specific  restriction,  the  use  not 
permitted  is  necessarily  reserved  to  the  patentee.  If  that  reserved 
control  of  use  of  the  machine  be  violated,  the  patent  is  thereby 
invaded.  This  right  to  sever  ownership  and  use  is  deducible  from 
the  nature  of  a  patent  monopoly  and  is  recognized  in  the  cases. 
*  *  *  * 

(The  court  takes  up  the  monopolistic  character  of  the  patent  and 
in  connection  with  the  right  to  exclusive  use  states:) 

In  the  Paper  Bag  case,  210  U.  S.  405,  this  right  to  exclude  others 
from  all  use  of  the  invention  was  held  to  be  so  comprehensive  that 
a  patentee  was  allowed  to  restrain,  by  injunction,  one  who  was 

Note. — Contributory  infringement  has  been  well  defined  as  the  intentional 
aiding  of  one  person  by  another  in  the  unlawful  making,  or  selling,  or  using 
of  the  patented  invention.  Thompson-Houston  Electric  Co.  v.  Kelsey,  etc., 
Co.,  72  Fed.  1016. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  155 

infringing  his  patent,  although  he  had,  during  a  long  term  of  years, 
neither  used  his  invention  himself,  nor  allowed  others  to  use  it. 

But  it  has  been  very  earnestly  said  that  a  condition  restricting 
the  buyer  to  use  it  only  in  connection  with  ink  made  by  the  patentee 
is  one  of  a  character  which  gives  to  a  patentee  the  power  to  extend 
his  monopoly  so  as  to  cause  it  to  embrace  any  subject,  not  within 
the  patent,  which  he  chooses  to  require  that  the  invention  shall  be 
used  in  connection  with.  Of  course,  the  argument  does  not  mean 
that  the  effect  of  such  a  condition  is  to  cause  things  to  become 
patented  which  were  not  so  without  the  requirement.  The  stencil, 
the  paper,  and  ink  made  by  the  patentee,  will  continue  to  be  un- 
patented.  Any  one  will  be  as  free  to  make,  sell,  and  use  like 
articles  as  they  would  be  without  this  restriction,  save  in  one  par- 
ticular,— namely,  they  may  not  be  sold  to  a  user  of  one  of  the 
patentee's  machines  with  intent  that  they  shall  be  used  in  violation 
of  the  license.  To  that  extent  competition  in  the  sale  of  such 
articles  for  use  with  the  machine  will  be  affected;  for  sale  to  such 
users  for  infringing  purposes  will  constitute  contributory  infringe- 
ment. But  the  same  consequence  results  from  the  sale  of  any  article 
to  one  who  proposes  to  associate  it  with  other  articles  to  infringe 
a  patent,  when  such  purpose  is  known  to  the  seller.  But  could  it 
be  said  that  the  doctrine  of  contributory  infringement  operates  to 
extend  the  monopoly  of  the  patent  over  subjects  not  within  it  be- 
cause one  subjects  himself  to  the  penalties  of  the  law  when  he  sells 
unpatented  things  for  an  infringing  use?  If  a  patentee  says,  "I 
may  suppress  my  patent  if  I  will.  I  may  make  and  have  made 
devices  under  my  patent,  but  I  will  neither  sell  nor  permit  any  one 
to  use  the  patented  things,"  he  is  within  his  right,  and  none  can 
complain.  But  if  he  says,  "I  will  sell  with  the  right  to  use  only 
with  other  things  proper  for  using  with  the  machines,  and  I  will 
sell  at  the  actual  cost  of  the  machines  to  me,  provided  you  will 
agree  to  use  only  such  articles  as  are  made  by  me  in  connection 
therewith," — if  he  chooses  to  take  his  profit  in  this  way,  instead  of 
taking  it  by  a  higher  price  for  the  machines,  has  he  exceeded  his 
exclusive  right  to  make,  sell,  and  use  his  patented  machines?  The 
market  for  the  sale  of  such  articles  to  the  users  of  his  machine, 
which,  by  such  a  condition,  he  takes  to  himself,  was  a  market  which 
he  alone  created  by  the  making  and  selling  of  a  new  invention. 
Had  he  kept  his  invention  to  himself,  no  ink  could  have  been  sold 
by  others  for  use  upon  machines  embodying  that  invention.  By 
selling  it  subject  to  the  restriction,  he  took  nothing  from  others  and 
in  no  wise  restricted  their  legitimate  market. 

For  the  purpose  of  testing  the  consequence  of  a  ruling  which  will 
support  the  lawfulness  of  a  sale  of  a  patented  machine  for  use 
only  its  connection  with-  supplies  necessary  for  its  operation,  bought 
from  the  patentee,  many  fanciful  suggestions  of  conditions  which 
might  be  imposed  by  a  patentee  have  been  pressed  upon  us.  Thus 
it  is  said  that  a  patentee  of  a  coffee  pot  might  sell  on  condition  that 
it  be  used  only  with  coffee  bought  from  him,  or,  if  the  article  be  a 


156  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

circular  saw,  that  it  might  be  sold  on  condition  that  it  be  used  only 
in  sawing  logs  procured  from  him.  These  and  other  illustrations 
are  used  to  indicate  that  this  method  of  marketing  a  patented  article 
may  be  carried  to  such  an  extent  as  to  inconvenience  the  public 
and  involve  innocent  people  in  unwitting  infringements.  But  these 
illustrations  all  fail  of  their  purpose,  because  the  public  is  always 
free  to  take  or  refuse  the  patented  article  on  the  terms  imposed. 
If  they  be  too  onerous  or  not  in  keeping  with  the  benefits,  the  pat- 
ented article  will  not  find  a  market.  The  public,  by  permitting  the 
invention  to  go  unused,  loses  nothing  which  it  had  before,  and 
when  the  patent  expires  will  be  free  to  use  the  invention  without 
compensation  or  restriction.  This  was  pointed  out  in  the  Paper 
Bag  Case,  where  the  inventor  would  neither  use  himself  nor  allow 
others  to  use,  and  yet  was  held  entitled  to  restrain  infringement, 
because  he  had  the  exclusive  right  to  keep  all  others  from  using 
during  the  life  of  the  patent.  This  larger  right  embraces  the  lesser 
of  permitting  others  to  use  upon  such  terms  as  the  patentee  chooses 
to  prescribe.  It  must  not  be  forgotten  that  we  are  dealing  with  a 
constitutional  and  statutory  monopoly.  An  attack  upon  the  rights 
under  a  patent  because  it  secures  a  monopoly  to  make,  to  sell,  and 
to  use,  is  an  attack  upon  the  whole  patent  system.  We  are  not  at 
liberty  to  say  that  the  Constitution  has  unwisely  provided  for  grant- 
ing a  monopolistic  right  to  inventors,  or  that  Congress  has  unwisely 
failed  to  impose  limitations  upon  the  inventor's  exclusive  right  of 
use.  And  if  it  be  that  the  ingenuity  of  patentees  in  devising  ways 
in  which  to  reap  the  benefit  of  their  discoveries  requires  to  be  re- 
strained, Congress  alone  has  the  power  to  determine  what  restraints 
shall  be  imposed.  As  the  law  now  stands  it  contains  none,  and 
the  duty  which  rests  upon  this  and  upon  every  other  court  is  to 
expound  the  law  as  it  is  written.  Arguments  based  upon  sugges- 
tions of  public  policy  not  recognized  in  the  patent  laws  are  not 
relevant.  The  field  to  which  we  are  invited  by  such  arguments  is 
legislative,  not  judicial.  The  decisions  of  this  court,  as  we  have 
construed  them,  do  not  so  limit  the  privilege  of  the  patentee,  and 
we  could  not  so  restrict  a  patent  grant  without  overruling  the  long 
line  of  judicial  decisions  from  circuit  courts  and  circuit  courts  of 
appeal,  heretofore  cited,  thus  inflicting  disastrous  results  upon  indi- 
viduals who  have  made  large  investments  in  reliance  upon  them. 

The  conclusion  we  reach  is  that  there  is  no  difference,  in  prin- 
ciple, between  a  sale  subject  to  specific  restrictions  as  to  the  time, 
place,  or  purpose  of  use,  and  restrictions  requiring  a  use  only  with 
other  things  necessary  to  the  use  of  the  patented  article  purchased 
from  the  patentee.  If  the  violation  of  the  one  kind  is  an  infringe- 
ment, the  other  is  also.  *  *  *  * 

So  understanding  the  import  of  the  question  in  connection  with 
the  facts  certified,  we  must  answer  the  question  certified  affirma- 
tively. 

MR.  CHIEF  JUSTICE  WHITE,  with  whom  concurred  MR.  JUSTICE 
HUGH-ES  and  MR.  JUSTICE  LAMAR,  dissenting: 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  157 

*  *  *  *  I  do  not  think  it  necessary  to  stop  to  point  out  the 
innumerable  subjects  which  will  be  susceptible  of  being  removed 
from  the  operation  of  State  judicial  power,  and  the  fundamental 
and  radical  character  of  the  change  which  must  come  as  a  result 
of  the  principle  decided.  But  nevertheless  let  me  give  a  few  illus- 
trations : 

Take  a  patentee  selling  a  patented  engine.  He  will  now  have  the 
right  s  by  contract  to  bring  under  the  patent  laws  all  contracts  for 
coal  or  electrical  energy  used  to  afford  power  to  work  the  machine, 
or  even  the  lubricants  employed  in  its  operation.  Take  a  patented 
carpenter's  plane.  The  power  now  exists  in  the  patentee  by  contract 
to  validly  confine  a  carpenter  purchasing  one  of  the  planes  to  the 
use  of  lumber  sawed  from  trees  grown  on  the  land  of  a  particular 
person,  or  sawed  by  a  particular  mill.  Take  a  patented  cooking 
utensil.  The  power  is  now  recognized  in  the  patentee  to  bind  by 
contract  one  who  buys  the  utensil  to  use  in  connection  with  it  no 
other  food  supply  but  that  sold  or  made  by  the  patentee.  Take  the 
invention  of  a  patented  window  frame.  It  is  now  the  law  that  the 
seller  of  the  frame  may  stipulate  that  no  other  material  shall  be 
used  in  a  house  in  which  the  window  frames  are  placed  except  such 
as  may  be  bought  from  the  patentee  and  seller  of  the  frame.  Take 
an  illustration  which  goes  home  to  everyone, — a  patented  sewing 
machine.  It  is  now  established  that,  by  putting  on  the  machine, 
in  addition  to  the  notice  of  patent  required  by  law,  a  notice  called  a 
license  restriction,  the  right  is  acquired,  as  against  the  whole  world, 
to  control  the  purchase  by  users  of  the  machine  of  thread,  needles, 
and  oil  lubricants  or  other  materials  convenient  or  necessary  for 
operation  of  the  machine.  The  illustrations  might  be  multiplied  in- 
definitely. That  they  are  not  imaginary  is  now  a  matter  of  common 
knowledge,  for,  as  the  result  of  a  case  decided  some  years  ago 
by  one  of  the  circuit  courts  of  appeal,  which  has  been  followed  by 
cases  in  other  circuit  courts  of  appeal,  to  which  reference  will  here- 
after be  made,  what  prior  to  the  first  of  those  decisions  on  a  sale  of 
a  patented  article  was  designated  a  condition  of  sale,  governed  by 
the  general  principles  of  law,  has  come  in  practice  to  be  denomi- 
nated a  license  restriction;  thus,  by  the  change  of  form,  under  the 
doctrine  announced  in  the  cases  referred  to,  bring  the  matters  cov- 
ered by  the  restriction  within  the  exclusive  sway  of  the  patent  law. 
As  the  transformation  has  come  about  in  practice  since  the  decisions 
in  question,  the  conclusion  is  that  it  is  attributable  as  an  effect  caused 
by  the  doctrine  of  those  cases.  And,  as  I  have  previously  stated,  it 
is  a  matter  of  common  knowledge  that  the  change  has  been  fre- 
quently resorted  to  for  the  purpose  of  bringing  numerous  articles  of 
common  use  within  the  monopoly  of  a  patent  when  otherwise  they 
would  not  have  been  embraced  therein,  thereby  tending  to  subject 
the  whole  of  society  to  a  widespread  and  irksome  monopolistic 
control. 


158  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

FIXING  PRICES   ON   PATENTED  ARTICLES. 

STANDARD  SANITARY  MFG.  CO.  v.  UNITED  STATES. 

THE  BATH  TUB  TRUST  CASE. 

226  U.  S.  20.     November  18,  1912. 

Sixteen  corporations  embracing  85  per  cent,  of  the  manufacturers 
and  90  per  cent,  of  the  jobbers  in  enameled  ironware,  such  as  bath- 
tubs, sinks,  etc.,  made  in  the  United  States,  entered  into  a  mutual 
agreement  by  which  they  bound  themselves  to  sell  certain  grades 
of  the  ware  only  at  the  prices  and  on  the  terms  fixed  in  the  schedules 
attached  to  the  agreement,  or  by  a  committee  appointed  by  the  par- 
ties thereto,  and  only  to  jobbers  who  should  sign  the  resale  contract 
prepared  by  them,  the  conditions  of  which  were  that  they  would  not 
resell  to  plumbers  except  at  the  prices  determined  by  the  manufact- 
urers and  that  they  would  not  deal  in  the  products  of  manufacturers 
not  in  the  combination.  The  contracts  or  agreements  creating  the 
combination  were  embodied  in  written  licenses  to  its  members  (the 
defendants)  to  use  a  patented  automatic  dredger,  which  was  a  useful 
and  time-saving  tool  used  in  finishing  the  ware  to  sprinkle  the  last 
two  or  more  coats  of  powdered  enamel  on  the  heated  iron,  the  ware 
itself  being  unpatented,  and  the  enameling  being  but  one  of  the 
several  operations  required  in  its  production,  to  which  operation 
even  the  patented  dredger  was  not  an  essential,  but  merely  an  im- 
provement on  the  hand-operated  dredges  of  the  prior  art  still  in 
use  in  some  factories.  The  government  brought  a  civil  suit  for  a 
violation  of  the  Sherman  Anti-Trust  Act  against  the  corporations 
in  this  combination  and  joined  as  a  party  defendant,  Edwin  L.  Way- 
man,  the  licensor  of  the  right  to  use  the  automatic  dredger,  as  it 
was  in  his  license  agreements  with  the  various  companies  that  the 
provisions  for  price  fixing,  etc.,  appeared.  The  defendants  con- 
tended that  a  patentee  could  make  such  agreements  as  these  under 
the  patent  laws  without  violating  the  Sherman  Act.  The  lower 
court  entered  a  decree  in  favor  of  the  government,  whereupon  an 
appeal  was  taken  to  the  Supreme  Court. 

MR.  JUSTICE  McKENNA  delivered  the  opinion  of  the  court: 

Before  the  agreements  the  manufacturers  of  enameled  ware  were 
independent  and  competitive.  By  the  agreements  they  were  com- 
bined, subjected  themselves  to  certain  rules  and  regulations,  among 
others,  not  to  sell  their  product  to  the  jobbers  except  at  a  price  fixed 
not  by  trade  and  competitive  conditions,  but  by  the  decision  of  the 
committee  of  six  of  their  number,  and  zones  of  sales  were  created. 
And  the  jobbers  were  brought  into  the  combination  and  made  its 
subjection  complete  and  its  purpose  successful.  Unless  they  entered 
the  combination  they  could  obtain  no  enameled  ware  from  any  manu- 
facturer who  was  in  the  combination,  and  the  condition  of  entry 
was  not  to  resell  to  plumbers  except  at  the  prices  determined  by  the 
manufacturers.  The  trade  was,  therefore,  practically  controlled 
from  producer  to  consumer,  and  the  potency  of  the  scheme  was 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  159 

established  by  the  co-operation  of  85  per  cent,  of  the  manufacturers, 
and  their  fidelity  to  it  was  secured  not  only  by  trade  advantages, 
but  by  what  was  practically  a  pecuniary  penalty,  not  inaptly  termed 
in  the  argument,  "cash  bail."  The  royalty  for  each  furnace  was  $5, 
80  per  cent,  of  which  was  to  be  returned  if  the  agreement  was  faith- 
fully observed;  it  was  to  be  "forfeited  as  a  penalty"  if  the  agree- 
ment was  violated.  And  for  faithful  observance  of  their  engage- 
ments the  jobbers,  too,  were  entitled  to  rebates  from  their  purchases. 
It  is  testified  that  90  per  cent,  of  the  jobbers  in  number  and  more 
than  90  per  cent,  in  purchasing  power  joined  the  combination. 

The  agreements  clearly,  therefore,  transcended  what  was  neces- 
sary to  protect  the  use  of  the  patent  or  the  monopoly  which  the  law 
conferred  upon  it.  They  passed  to  the  purpose  and  accomplished  a 
restraint  of  trade  condemned  by  the  Sherman  law.  *  *  *  And 
there  is  nothing  in  Henry  v.  A.  B.  Dick  Co.,  224  U.  S.  1,  which 
contravenes  the  views  herein  expressed.  *  *  *  * 

Decree  affirmed. 

Note. — Subsequent  to  the  above  decision,  to  wit,  February  14,  1913, 
eleven  corporations  and  eleven  individuals  in  the  bathtub  trust  were  found 
guilty  of  criminal  conspiracy  in  restraint  of  trade  by  a  jury  in  the  United 
States  District  Court.They  were  indicted  under  the  criminal  section  of  the 
Sherman  Anti-Trust  Act. 


BAUER  &  CIE.  AND  THE  BAUER  CHEMICAL  COMPANY 
v.  JAMES  O'DONNELL. 

THE  SANATOGEN  CASE. 
229  U.  S.  1.     May  26,  1913. 

MR.  JUSTICE  DAY  delivered  the  opinion  of  the  court: 

This  case  is  on  a  certificate  from  the  Court  of  Appeals  of  the 
District  of  Columbia.  The  facts  stated  in  the  certificate  are : 

Bauer  &  Cie.,  of  Berlin,  Germany,  co-partners,  being  the  assignees 
of  letters  patent  of  the  United  States,  dated  April  5,  1898,  No. 
601995,  covering  a  certain  water  soluble  albumenoid  known  as  "San- 
atogen"  and  the  process  of  manufacturing  the  same,  about  July, 
1907,  entered  into  an  agreement  with  F.  W.  Hehmeyer,  doing  busi- 
ness in  the  city  of  New  York  under  the  trade  name  of  the  Bauer 
Chemical  Company,  whereby  Hehmeyer  became  ancl  has  since  been 
the  sole  agent  and  licensee  for  the  sale  of  said  product  in  the 
United  States,  the  agreement  contemplating  that  Hehmeyer  should 
have  power  to  fix  the  price  of  sale  to  wholesalers  or  distributors 
and  to  retailers,  and  to  the  public.  The  agreement  further  contem- 
plated that  said  product  should  be  furnished  Hehmeyer  at  manu- 
facturing cost,  the  net  profits  obtained  by  him  to  be  shared  equally 
by  the  parties  to  the  agreement.  Since  April,  1910,  this  product 


160  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

has  been  uniformly  sold  and  supplied  to  the  trade  and  to  the  public 
by  the  appellants  and  their  licensees  in  sealed  packages  bearing  the 
name  "Sanatogen,"  the  words  "Patented  in  U.  S.  A.,  No.  601995," 
and  the  following: 

"Notice  to  the  retailer. 

"This  size  package  of  Sanatogen  is  licensed  by  us  for  sale  and 
use  at  a  price  not  less  than  one  dollar  ($1.00).  Any  sale  in  viola- 
tion of  this  condition,  or  use  when  so  sold,  will  constitute  an  in- 
fringement of  our  patent  No.  601,995,  under  which  Sanatogen  is 
manufactured,  and  all  persons  so  selling  or  using  packages  or  con- 
tents will  be  liable  to  injunction  and  damages. 

"A  purchase  is  an  acceptance  of  this  condition.  All  rights  revert 
to  the  undersigned  in  the  event  of  violation. 

"THE  BAUER  CHEMICAL  Co/' 

The  appellee  is  the  proprietor  of  a  retail  drug  store  at  904  F 
street  N.  W.,  in  this  city.  He  purchased  of  the  Bauer  Chemical 
Company  for  his  retail  trade  original  packages  of  said  Sanatogen 
bearing  the  aforesaid  notice.  These  packages  he  sold  at  retail  at 
less  than  one  dollar  and,  persisting  in  such  sales,  appellants  in  March, 
1911,  severed  relations  with  him.  Thereupon  appellee,  without  the 
license  or  consent  of  the  appellants,  purchased  from  the  jobbers 
within  the  District  of  Columbia,  said  jobbers  having  purchased 
from  appellants,  original  packages  of  said  product  bearing  the  afore- 
said notice,  sold  said  packages  at  retail  at  less  than  the  price  fixed 
in  said  notice,  and  avers  that  he  will  continue  such  sales. 

The  question  propounded  is: 

Did  the  acts  of  the  appellee,  in  retailing  at  less  than  the  price 
fixed  in  said  notice,  original  packages  of  "Sanatogen"  purchased 
of  jobbers  as  aforesaid,  constitute  infringement  of  appellants' 
patent?  *  *  *  * 

It  is  contended  in  argument  that  the  notice  in  this  case  deals  with 
the  use  of  the  invention,  because  the  notice  states  that  the  package 
is  licensed  "for  sale  and  use  at  a  price  not  less  than  one  dollar" ; 
that  a  purchase  is  an  acceptance  of  the  conditions;  and  that  all 
rights  revert  to  the  patentee  in  event  of  violation  of  the  restriction. 
But,  in  view  of  the  facts  certified  in  this  case,  as  to  what  took  place 
concerning  the  article  in  question,  it  is  a  perversion  of  terms  to 
call  the  transaction  in  any  sense  a  license  to  use  the  invention.  The 
jobber  from  whom  the  appellee  purchased  had  previously  bought, 
at  a  price  which  must  be  deemed  to  have  been  satisfactory,  the 
packages  of  Sanatogen  afterwards  sold  to  the  appellee.  The  pat- 
entee had  no  interest  in  the  proceeds  of  the  subsequent  sales,  no 
right  to  any  royalty  thereon,  or  to  participation  in  the  profits 
thereof.  The  packages  were  sold  with  as  full  and  complete  title 
as  any  article  could  have  when  sold  in  the  open  market,  excepting 
only  the  attempt  to  limit  the  sale  or  use  when  sold  for  not  less  than 
$1.  In  other  words,  the  title  transferred  was  full  and  complete, 
with  an  attempt  to  reserve  the  right  to  fix  the  price  at  which 
subsequent  sales  could  be  made.  There  is  no  showing  of  a  qualified 
sale  for  less  than  value  for  limited  use  with  other  articles  only,  as 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  161 

was  shown  in  the  Dick  case.  There  was  no  transfer  of  a  limited 
right  to  use  this  invention,  and  to  call  the  sale  a  license  to  use  is  a 
mere  play  upon  words. 

The  real  question  is  whether  in  the  exclusive  right  secured  by 
statute  to  "vend"  a  patented  article  there  is  included  the  right,  by 
notice,  to  dictate  the  price  at  which  subsequent  sales  of  the  article 
may  be  made.  The  patentee  relies  solely  upon  the  notice  quoted 
to  control  future  prices  in  the  resale  by  a  purchaser  of  an  article 
said  to  be  of  great  utility  and  highly  desirable  for  general  use. 
The  appellee  and  the  jobbers  from  whom  he  purchased  were  neither 
the  agents  nor  the  licensees  of  the  patentee.  They  had  the  title  to, 
and  the  right  to  sell,  the  article  purchased  without  accounting  for 
the  proceeds  to  the  patentee  and  without  making  any  further  pay- 
ment than  had  already  been  made  in  the  purchase  from  the  agent 
of  the  patentee.  Upon  such  facts  as  are  now  presented  we  think 
the  right  to  vend  secured  in  the  patent  statute  is  not  distinguishable 
from  the  right  of  vending  given  in  the  copyright  act.  In  both  in- 
stances it  was  the  intention  of  Congress  to  secure  an  exclusive 
right  to  sell,  and  there  is  no  grant  of  a  privilege  to  keep  up  prices 
and  prevent  competition  by  notices  restricting  the  price  at  which 
the  article  may  be  resold.  The  right  to  vend  conferred  by  the 
patent  law  has  been  exercised,  and  the  added  restriction  is  beyond 
the  protection  and  purpose  of  the  act.  This  being  so,  the  case  is 
brought  within  that  line  of  cases  in  which  this  court  from  the  begin- 
ning has  held  that  a  patentee  who  has  parted  with  a  patented 
machine  by  passing  title  to  a  purchaser  has  placed  the  article  beyond 
the  limits  of  the  monopoly  secured  by  the  patent  act. 

Holding  these  views,  the  question  propounded  by  the  Court  of 
Appeals  will  be  answered  in  the  negative,  and  it  is  so  ordered. 

Dissenting:  Mr.  Justice  McKenna,  Mr.  Justice  Holmes,  Mr. 
Justice  Lurton,  and  Mr.  Justice  Van  Devanter. 

ISIDOR  STRAUS  AND  NATHAN  STRAUS,  TRADING  AS 

R.  H.  MACY  &%  CO.,  v.  AMERICAN  PUBLISHERS' 

ASSOCIATION,  ET  AL. 

231  U.  S.  222.     Decided  December  1,  1913. 

Isidor  Straus  and  Nathan  Straus,  trading  as  R.  H.  Macy  &  Co., 
brought  suit  in  the  Supreme  Court  of  New  York  State  asking  for 
an  injunction  against  the  American  Publishers'  Association  and  the 
American  Booksellers'  Association,  restraining  them  from  inter- 
fering with  plaintiffs'  right  to  purchase  and  sell  copyrighted  books. 
The  plaintiffs  alleged  that  they  conducted  a  department  store  in 
New  York  City,  a  large  department  of  which  was  devoted  to  books, 
magazines,  pamphlets;  that  because  of  their  methods  of  business 
they  had  been  able  to  undersell  other  retail  book  stores.  The 
American  Publishers'  Association  by  means  of  resolutions  and 
agreements,  and  with  the  co-operation  of  the  association  and  their 


162  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

members,  and  by  the  use  of  various  practices  and  methods,  had 
stipulated  that  books  should  be  sold  to  booksellers  only,  who  would 
maintain  the  retail  prices  upon  copyrighted  books  for  one  year,  and 
the  members  of  the  association  would  not  sell  books  to  anyone 
who  would  cut  such  prices.  The  plaintiffs  maintained  that  the 
defendants  had  thereby  restrained  and  prevented  competition  in  the 
State  of  New  York  and  throughout  all  of  the  United  States  in 
the  supply  and  prices  of  books,  and  that  the  same  was  in  violation 
of  the  Sherman  Anti-Trust  Law,  and  that  thereby  also  their  busi- 
ness had  been  seriously  affected,  and  they  asked  that  the  combina- 
tions and  agreements  among  the  members  of  the  association  and 
with  the  association  be  declared  unlawful,  and  that  the  defendants 
be  enjoined  from  acting  thereunder  or  accomplishing  the  purposes 
of  such  agreement.  The  case  was  tried  before  court  without  a 
jury,  and  the  court  found  that  the  facts  set  forth  by  the  plaintiffs 
were  true.  The  association  then  amended  their  resolutions  and 
agreements  so  as  to  restrict  the  same  to  copyrighted  books  only, 
and  to  the  end  that  they  would  not  apply  to  uncopyrighted  books. 
The  State  court  decided  that  so  far  as  such  resolutions  and  agree- 
ments related  to  uncopyrighted  books  they  were  unlawful  and 
granted  an  injunction  and  damages,  but  held  that  as  to  copyrighted 
books  the  agreements,  resolutions  and  actions  of  the  defendants 
were  not  unlawful.  On  appeal,  the  Court  of  Appeals  of  New  York 
State  held  that  the  agreement  as  to  copyrighted  books  was  not 
illegal  because  of  the  monopoly  granted  to  a  holder  of  a  copyright 
under  the  statute  of  the  United  States.  From  this  decision  an 
appeal  was  taken  to  the  Supreme  Court  of  the  United  States. 

MR.  JUSTICE  DAY  delivered  the  opinion  of  the  court: 

From  the  finding  of  facts  upon  which  the  court  certified  the  ques- 
tion decided  to  the  Court  of  Appeals,  after  the  attempted  reforma- 
tion in  view  of  the  first  decision  of  that  court,  it  appears  that  the 
Publishers'  Association  was  composed  of  probably  75  per  cent,  of 
the  publishers  of  copyrighted  and  uncopyrighted  books  in  the  United 
States,  and  that  the  Booksellers'  Association  included  a  majority 
of  the  booksellers  throughout  the  United  States ;  that  the  associa- 
tions adopted  resolutions  and  made  agreements  obligating  their 
members  to  sell  copyrighted  books  only  to  those  who  would  main- 
tain the  retail  price  of  such  net  copyrighted  books,  and,  to  that 
end,  that  the  associations  combined  and  co-operated  with  the  effect 
that  competition  in  such  books  at  retail  was  almost  completely  de- 
stroyed. The  findings  further  show  that  the  associations  employed 
various  methods  of  ascertaining  whether  prices  of  net  copyrighted 
books  were  cut  and  whether  there  was  competition  in  the  sale 
thereof  at  retail,  and  issued  cut-off  lists,  so-called,  directing  the  dis- 
continuance of  the  sale  of  such  books  to  offenders,  and  that  the 
plaintiffs  in  error,  who  had  failed  to  maintain  net  prices  upon  copy- 
righted books,  had  been  put  upon  the  cut-off  lists,  and  were  unable 
to  secure  a  supply  of  such  books  in  the  ordinary  course  of  business. 
It  further  appears  that  in  some  instances  dealers  who  had  supplied 
the  plaintiffs  in  error  were  wholly  ruined  and  driven  out  of  busi- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  163 

ness;  that  the  Booksellers'  Association  widely  circulated  the  names 
of  such  dealers,  and  warned  others  to  avoid  their  fate,  and  that 
various  circulars  were  issued  to  the  trade  at  large  by  both  associa- 
tions, warning  all  persons  against  dealing  with  the  plaintiffs  in  error 
or  other  so-called  price-cutters;  that  after  the  reformation  of  the 
resolutions  and  agreements  of  1904,  the  associations  and  their 
members  continued  the  same  methods  as  to  ascertaining  the  supply 
of  copyrighted  books  of  the  plaintiffs  in  error,  as  to  cut-off  lists 
and  circulars  to  the  trade,  and  that,  although  in  1907  the  resolution 
of  the  Publishers'  Association  was  modified  so  that  the  "agree- 
ment" became  a  "recommendation,"  the  cut-off  lists  were  still  issued, 
with  plaintiff's  name  thereon,  and  that  the  dealers  still  refused  to 
supply  plaintiffs  in  error  with  books  of  any  kind.  And  it  also 
appears  from  the  findings  of  fact  that  the  members  of  the  associa- 
tions resided  in  and  carried  on  the  business  of  selling  books  in 
many  different  States,  and  purchased  books  from  persons  in  many 
States  other  than  the  one  in  which  they  resided  and  did  business; 
and  that  the  rules,  regulations  and  agreements  of  the  associations 
were  enforced  against  all  publishers  and  dealers  in  books  throughout 
the  United  States,  whether  they  were  members  of  either  association 
or  not,  and  whether  they  purchased  books  in  one  State  for  trans- 
portation and  delivery  in  another  or  for  delivery  in  the  State  where 
purchased.  We  agree  with  the  Court  of  Appeals  in  its  characteriza- 
tion of  the  agreement  involved  in  this  case,  about  which  there  seems 
to  have  been  no  difference  of  opinion,  except  as  to  the  supposed 
protection  of  the  copyright  act.  It  manifestly  went  beyond  any  fair 
and  legal  agreement  to  protect  prices  and  trade  as  among  parties 
thereto,  and  prevented,  as  the  Court  of  Appeals  said,  when  dealing 
with  uncopyrighted  books,  the  sale  of  books  of  any  kind,  at  any 
price,  to  those  who  were  condemned  by  the  terms  of  the  agreement, 
and  with  whom  dealings  were  practically  prohibited.  We  conclude, 
therefore,  that  the  Court  of  Appeals  erred  in  holding  that  the  agree- 
ment was  justified  by  the  copyright  act,  and  was  not  within  the 
denunciation  of  the  Sherman  Act,  and  in  denying,  for  that  reason 
alone,  the  right  of  the  plaintiffs  in  error  to  recover  under  the  State 
Act  as  to  copyrighted  books. 

As  the  Federal  question,  made  in  the  manner  which  we  have 
stated,  was,  in  our  view,  wrongly  decided,  and  such  decision  was 
the  basis  of  the  judgment  in  the  State  court,  the  judgment  of  that 
court  must  be  reversed.  Murdock  v.  Memphis,  20  Wall.  590. 

Judgment  reversed  and  case  remanded  to  the  State  court  whence 

it  came  for  further  proceedings  not  inconsistent  with  this 

opinion. 


i._in  Dr.  Miles  Medical  Co.  v.  Park,  220  U.  S.  373  (1911),  the  med- 
ical company  was  engaged  in  the  manufacture  and  sale  of  proprietary  medi- 
cines, prepared  by  means  of  secret  methods  and  formulas,  and  identified  by 
distinctive  packages,  labels  and  trademarks.  It  had  established  an  extensive 
trade  throughout  the  United  States  and  foreign  countries,  selling  its  products 
to  jobbers  and  wholesale  druggists,  who  in  turn  sold  to  retail  druggists.  In 
the  case  of  each  remedy  it  fixed,  by  written  contract,  not  only  the  price  of 


164  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

its  own  sales  to  jobbers  and  wholesale  dealers,  but  also  the  retail  prices, 
selling  its  products  to  those  only  who  agreed  to  observe  such  price  regulations. 
The  company  alleged  that  certain  department  stores  had  inaugurated  a  "cut 
rate"  or  "cut  price"  system  which  caused  great  damage  to  its  business  and 
affected  the  sale  of  the  remedies,  from  the  fact  that  the  retail  drug  stores 
could  not  meet  such  cut  rate  prices,  and  therefore  no  longer  kept  the  remedies 
in  stock  for  sale.  The  defendant,  Park,  having  procured  supplies  of  the 
remedies  from  third  parties,  "advertised,  marketed  and  sold"  the  same  at 
cut  rates.  The  company  asked  for  an  injunction  against  such  practices  and 
other  necessary  relief.  The  Supreme  Court  held  that  such  contracts  fixing 
the  price  restricted  competition  and  were  in  restraint  of  trade.  They  resulted 
in  a  combination  between  the  manufacturer,  wholesalers  and  retailers  to 
maintain  prices  and  stifle  competition.  The  Court  said :  "Agreements  or 
combinations  between  dealers,  having  for  their  sole  purpose  the  destruction 
of  competition  and  the  fixing  of  prices,  are  injurious  to  the  public  interest 
and  void.  *  *  *  *  The  complainant's  plan  falls  within  the  principle  which 
condemns  contracts  of  this  class.  *  *  *  *  And  where  commodities  have 
passed  into  the  channels  of  trade  and  are  owned  by  dealers,  the  validity  of 
agreements  to  prevent  competition  and  to  maintain  prices  is  not  to  be  de- 
termined by  the  circumstance  whether  they  were  produced  by  several  manu- 
facturers or  by  one,  or  whether  they  were  previously  owned  by  one  or  by 
many.  The  complainant  having  sold  its  products  at  prices  satisfactory  to 
itself,  the  public  is  entitled  to  whatever  advantage  may  be  derived  from  com- 
petition in  the  subsequent  traffic."  The  injunction  asked  for  was  refused. 

The  following  cases  on  "price  fixing  contracts  or  combinations"  have  been 
decided  recently  in  the  lower  Federal  Courts.  In  some  cases  appeals  to  the 
Supreme  Court  have  been  taken : 

Note  2. — In  the  Ford  Case  (Ford  Motor  Company  v.  Union  Motor  Sales 
Company,  U.  S.  Dist.  Ct,  Ohio),  it  was  held  that  since  the  vendor  (the  Ford 
Company)  had  actually  parted  with  the  title  to  the  cars  sold  to  its  licensed 
dealers  it  could  not,  by  contract  with  its  dealers,  dictate  the  resale  price. 
The  court  cites  the  case  of  Bauer  v.  O'Donnell,  in  which  it  was  held  that 
the  vendor  of  a  patented  article  could  not  by  the  notice  on  the  package  con- 
trol the  price  at  which  the  article  should  be  resold  after  purchase  by  the 
vendee.  It  holds  that  what  cannot  be  done  by  notice  to  the  vendee  cannot  be 
done  by  contract  with  the  vendee,  as  in  both  cases  the  sale  to  the  vendee  passes 
the  article  out  of  the  patent  monopoly  and  beyond  the  control  of  the  patentee. 
This  case  involved  an  old  form  of  contract  which  the  Ford  Company  has  dis- 
continued. Its  new  form  of  contract  was  passed  upon  in  a  decision  given  in  the 
District  Court  of  the  United  States,  in  Illinois,  by  Judge  Landis,  December  3, 
1914,  by  which  the  Barry  Sales  Company  was  enjoined  from  "inducing  or 
attempting  to  induce  any  authorized  agent  of  the  Ford  Company  to  arrange 
for  the  sale  of  Ford  cars  in  violation  of  any  of  the  terms  of  the  contract  of 
such  agent  with  the  company." 

Note  3.— Keystone  Watch  Case:  The  growth  of  the  Keystone  Watch 
Company  and  the  various  consolidations  by  which  it  had  been  formed  and 
enlarged  were  not  criticized  by  the  court,  but  the  attempt  of  the  company 
later  on  to  coerce  its  jobbers  to  sell  at  a  fixed  price,  by  threatening  refusal 
to  deal  with  those  who  would  not,  was  held  to  be  a  direct  and  unlawful 
restraint  of  trade.  The  plan  of  selling  the  Howard  watch,  material  parts  of 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  165 

which  were  protected  by  patents,  was  held  lawful  so  far  as  fixing  by  agree- 
ment with  the  jobbers  a  minimum  fixed  price  at  which  the  jobber  should 
sell,  but  unlawful  in  the  further  attempt  by  notice  on  the  box  containing  the 
watch  to  control  the  price  at  which  the  retailer  should  sell  to  the  consumer. 
This  case  was  decided  by  Buffington,  Hunt  and  McPherson,  Circuit  Judges 
in  the  Circuit  Court  of  Appeals  in  Pennsylvania. 

Note  4. — In  the  Victor  Talking  Machine  Case  (Victor  Talking  Machine 
Co.  v.  Macy  &  Co.,  U.  S.  Dist.  Ct.,  N.  Y.),  the  Victor  Company  brought  suit 
for  the  infringement  of  its  patents.  Various  patents  cover  the  Victor  Talk- 
ing Machine  and  sound  records.  Every  machine  and  sound  record  has  ac- 
companying it  a  notice  that  the  title  remains  in  the  manufacturer  for  the 
term  of  the  patent  having  the  longest  term  to  run.  The  license  to  use  the 
machine  and  records  is  granted  on  payment  of  a  fixed  sum  as  royalty  at  the 
time  the  license  is  granted.  Upon  the  final  expiration  of  the  patents  the 
goods  become  the  property  of  the  licensee  if  he  shall  have  observed  the  con- 
ditions of  the  license.  The  contract  also  provides  for  retaking  the  patented 
goods  upon  violation  of  any  of  the  terms  of  the  license.  One  of  those  terms 
is  that  the  goods  shall  be  relicensed  only  upon  payment  of  certain  fixed 
prices.  Alleged  infringement  lay  in  the  act  of  the  defendant  selling  the 
articles  outright  for  less  than  the  fixed  price.  The  court  held  that  the  com- 
plainant by  receiving  the  entire  royalty  had  parted  with  its  interest  and  could 
not  object  to  a  licensee  disposing  of  the  article  at  less  than  the  fixed  price. 
The  court  said  in  conclusion :  "If  this  were  a  case  of  first  impression  I 
might  feel  that  no  sufficient  reason  exists  for  holding  that  a  patentee  could 
not  attach  such  limitations  to  the  future  use  of  his  patented  goods  as  he 
might  choose  irrespective  of  whether  he  had  received  a  full  royalty  or  not. 
I  think,  however,  the  case  of  Bauer  v.  O'Donnell  holds  to  the  contrary." 

Note  5.— Kellogg  Case  (U.  S.  v.  Kellogg  Toasted  Corn  Flake  Co.,  U.  S. 
Dist.  Ct.  in  Michigan)  No  illegality  was  alleged  in  the  formation  or  growth 
of  the  company,  but  the  Government  centered  its  attack  on  the  present  selling 
plan  of  the  defendant,  which  it  claimed  was  a  combination  between  the  com- 
pany and  its  jobbers  and  retailers.  The  selling  plan  is  briefly  described  as 
follows :  The  company  owns  a  patent  on  the  cartons  or  packages  in  which 
its  "Corn  Flakes"  are  sold.  Sales  are  made  directly  to  jobbers,  the  company 
refusing  to  deal  with  consumers  or  retailers.  Agreements  are  exacted  from 
the  jobbers  to  charge  the  retailers  a  specified  price,  and  this  condition  is 
strictly  enforced  by  the  company  refusing  to  continue  dealings  with  any 
jobber  who  fails  to  maintain  the  fixed  prices.  An  attempt  is  made  to  form 
agreements  between  the  company  and  the  retailer  by  printing  on  the  carton 
that  the  package  and  its  contents  are  sold  on  condition  that  the  package  and 
contents  shall  not  be  retailed  for  less  than  ten  cents,  and  that  a  violation  would 
be  considered  as  an  infringement  on  the  company's  patent  rights.  The  Court 
held  that  although  the  notice  on  the  carton  may  not  constitute  a  valid  con- 
tract it  may  still  have  the  effect  of  unduly  restraining  trade,  and  the  fact  that 
the  carton  is  patented  is  immaterial  in  determining  whether  the  company's 
plan  of  maintaining  prices  was  a  violation  of  the  Sherman  Law. 

Also  in  Kellogg  Co.  v.  Buck,  208  Federal  Reports  383,  in  refusing  to  enforce 
the  restrictions  above  mentioned  the  court  held  that  where  a  patented  article 
has  passed  into  the  channels  of  trade  and  reached  a  retail  dealer,  the  manu- 
facturing patentee  is  not  entitled  to  enforce  a  price  restriction  agreement. 


1 66  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Sub-Section  B. 

EXTENT  OF  THE  POWEE  OF  THE  STATES  OVEE  COMMEECE. 
1.     The  State  Taxing  Power  as  Affecting  Commerce. 

BROWN  v.  MARYLAND. 
12  WHEATON,  419.     1827. 

A  statute  of  Maryland,  passed  in  1821,  provided  that  all  im- 
porters of  foreign  commodities  or  articles  and  persons  selling  the 
same  by  wholesale,  bale  or  package,  hogshead,  barrel,  or  tierce 
should,  before  being  authorized  to  sell  the  same  take  out  a  license, 
for  which  they  should  pay  fifty  dollars.  In  case  of  neglect  or 
refusal  to  pay  the  license,  a  heavy  penalty  was  imposed  by  the 
statute.  Brown  was  charged  with  having  imported  and  sold  one 
package  of  foreign  dry  goods  without  having  a  license  to  do  so. 
He  was  fined  by  the  State  Court  and  the  Court  of  Appeals  upheld 
the  lower  court.  An  appeal  was  taken  to  the  Supreme  Court  of 
the  United  States  on  the  ground  that  the  Legislature  of  a  State  could 
not  constitutionally  requir^  the  importer  of  foreign  articles  to  take 
out  a  license  from  the  State  before  being  permitted  to  sell  a  bale  or 
package  so  imported. 

MR.  CHIEF  JUSTICE  MARSHALL  delivered  the  opinion  of  the  court : 

The  plaintiffs  in  error  take  the  burden  upon  themselves,  and  in- 
sist that  the  act  under  consideration  is  repugnant  to  two  provisions 
in  the  Constitution  of  the  United  States. 

1.  To  that  which  declares  that  "no  State  shall,  without  the  con- 
sent of  Congress,  lay  any  imposts  or  duties  on  imports  or  exports, 
except  what  may  be  absolutely  necessary  for  executing  its  inspection 
laws." 

2.  To  that  which  declares  that  Congress  shall  have  power  "to 
regulate  commerce  with   foreign  nations,  and  among  the  several 
States,  and  with  the  Indian  tribes." 

1.  The  first  inquiry  is  into  the  extent  of  the  prohibition  upon 
States  "to  lay  any  imposts  or  duties  on  imports  or  exports."  The 
counsel  for  the  State  of  Maryland  would  confine  this  prohibition  to 
laws  imposing  duties  on  the  act  of  importation  or  exportation.  The 

counsel  for  the  plaintiffs  in  error  give  them  a  much  wider  scope. 
*     *     *     * 

What,  then,  is  the  meaning  of  the  words,  "imposts  or  duties  on 
imports  or  exports?" 

An  impost,  or  duty  on  imports,  is  a  custom  or  a  tax  levied  on 
articles  brought  into  a  country,  and  is  most  usually  secured  before 
the  importer  is  allowed  to  exercise  his  rights  of  ownership  over 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  167 

them,  because  evasions  of  the  law  can  be  prevented  more  certainly 
by  executing  it  while  the  articles  are  in  its  custody.  It  would  not, 
however,  be  less  an  impost  or  duty  on  the  articles,  if  it  were  to  be 
levied  on  them  after  they  were  landed.  The  policy  and  consequent 
practice  of  levying  or  securing  the  duty  before  or  on  entering  the 
port,  does  not  limit  the  power  to  that  state  of  things,  nor,  conse- 
quently, the  prohibition,  unless  the  true  meaning  of  the  clause  so 
confines  it.  What,  then,  are  "imports?"  The  lexicons  inform  us 
they  are  "things  imported."  If  we  appeal  to  usage  for  the  meaning 
of  the  word,  we  shall  receive  the  same  answer.  They  are  the  articles 
themselves  which  are  brought  into  the  country.  "A  duty  on  im- 
ports," then,  is  not  merely  a  duty  on  the  act  of  importation,  but  is 
a  duty  on  the  thing  imported.  It  is  not,  taken  in  its  literal  sense, 
confined  to  a  duty  levied  while  the  article  is  entering  the  country, 
but  extends  to  a  duty  levied  after  it  has  entered  the  country.  The 
succeeding  words  of  the  sentence  which  limit  the  prohibition,  show 
the  extent  in  which  it  was  understood.  The  limitation  is  "except 
what  may  be  absolutely  necessary  for  executing  its  inspection 
laws."  Now,  the  inspection  laws,  so  far  as  they  act  upon  articles 
for  exportation,  are  generally  executed  on  land,  before  the  article 
is  put  on  board  the  vessel ;  so  far  as  they  act  upon  importations, 
they  are  generally  executed  upon  articles  which  are  landed.  The 
tax  or  duty  of  inspection,  then,  is  a  tax  which  is  frequently,  if  not 
always  paid  for  service  performed  on  land,  while  the  article  is  in 
the  bosom  of  the  country.  Yet  this  tax  is  an  exception  to  the  pro- 
hibition on  the  States  to  lay  duties  on  imports  or  exports.  The 
exception  was  made  because  the  tax  would  otherwise  have  been 
within  the  prohibition.  *  *  *  * 

From  the  vast  inequality  between  the  different  States  of  the  con- 
federacy, as  to  commercial  advantages,  few  subjects  were  viewed 
with  deeper  interest,  or  excited  more  irritation,  than  the  manner  in 
which  the  several  States  exercised,  or  seemed  disposed  to  exercise, 
the  power  of  laying  duties  on  imports.  From  motives  which  were 
deemed  sufficient  by  the  statesmen  of  that  day,  the  general  power 
of  taxation,  indispensably  necessary  as  it  was,  and  jealous  as  the 
States  were  of  an  encroachment  on  it,  was  so  far  abridged  as  to 
forbid  them  to  touch  imports  or  exports,  with  the  single  exception 
which  has  been  noticed.  Why  are  they  restrained  from  imposing 
these  duties?  Plainly,  because,  in  the  general  opinion,  the  interest 
of  all  would  be  best  promoted  by  placing  that  whole  subject  under 
the  control  of  Congress.  Whether  the  prohibition  to  "lay  imposts, 
or  duties  on  imports  or  exports,"  proceeded  from  an  apprehension 
that  the  power  might  be  so  exercised  as  to  disturb  that  equality 
among  the  States  which  was  generally  advantageous,  or  that  har- 
mony between  them  which  it  was  desirable  to  preserve,  or  to  main- 
tain unimpaired  our  commercial  connections  with  foreign  nations, 
or  to  confer  this  source  of  revenue  on  the  government  of  the  Union, 
or  whatever  other  motive  might  have  induced  the  prohibition,  it  is 
plain  that  the  object  would  be  as  completely  defeated  by  a  power 


1 68  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

to  tax  the  article  in  the  hands  of  the  importer  the  instant  it  was 
landed,  as  by  a  power  to  tax  it  while  entering  the  port.  There  is 
no  difference,  in  effect,  between  a  power  to  prohibit  the  sale  of  an 
article,  and  a  power  to  prohibit  its  introduction  into  the  country. 
The  one  would  be  a  necessary  consequence  of  the  other.  No  goods 
would  be  imported  if  none  could  be  sold.  No  objection  of  any 
description  can  be  accomplished  by  laying  a  duty  on  importation, 
which  may  not  be  accomplished  with  equal  certainty  by  laying  a 
duty  on  the  thing  imported  in  the  hands  of  the  importer.  It  is 
obvious  that  the  same  power  which  imposes  a  light  duty,  can  impose 
a  very  heavy  one,  one  which  amounts  to  a  prohibition.  Questions 
of  power  do  not  depend  on  the  degree  to  which  it  may  be  exer- 
cised. If  it  may  be  exercised  at  all,  it  must  be  exercised  at  the  will 
of  those  in  whose  hands  it  is  placed.  If  the  tax  may  be  levied  in 
this  form  by  a  State,  it  may  be  levied  to  an  extent  which  will  defeat 
the  revenue  by  imposts,  so  far  as  it  is  drawn  from  importations 
into  the  particular  State. 

The  counsel  for  the  plaintiffs  in  error  contend  that  the  importer 
purchases,  by  payment  of  the  duty  to  the  United  States,  a  right  to 
dispose  of  his  merchandise,  as  well  as  to  bring  it  into  the  country; 
and  certainly  the  argument  is  supported  by  strong  reason,  as  well 
as  by  the  practice  of  nations,  including  our  own.  The  object  of  im- 
portation is  sale ;  it  constitutes  the  motive  for  paying  the  duties ; 
and  if  the  United  States  possess  the  power  of  conferring  the  right 
to  sell,  as  the  consideration  for  which  the  duty  is  paid,  every  prin- 
ciple of  fair  dealing  requires  that  they  should  be  understood  to  con- 
fer it.  The  practice  of  most  commercial  nations  conforms  to 
this  idea.  Duties,  according  to  that  practice,  are  charged  on  those 
articles  only  which  are  intended  for  sale  or  consumption  in  the 
country. 

This  indictment  is  against  the  importer,  for  selling  a  package  of 
dry  goods  in  the  form  in  which  it  was  imported,  without  a  license. 
This  state  of  things  is  changed  if  he  sells  them  or  otherwise  mixes 
them  with  the  general  property  of  the  State,  by  breaking  up  his 
packages  and  traveling  with  them  as  an  itinerant  peddler.  In  the 
first  case,  the  tax  intercepts  the  import,  as  an  import  in  its  way  to 
become  incorporated  with  the  general  mass  of  property,  and  denies 
it  the  privilege  of  becoming  so  incorporated  until  it  shall  have  con- 
tributed to  the  revenue  of  the  State.  It  denies  to  the  importer  the 
right  of  using  the  privilege  which  he  has  purchased  from  the  United 
States  until  he  shall  have  also  purchased  it  from  the  State.  In  the 
last  cases,  the  tax  finds  the  article  already  incorporated  with  the 
mass  of  property  by  the  act  of  the  importer.  He  has  used  the  priv- 
ilege he  had  purchased,  and  has  himself  mixed  them  up  with  the 
common  mass,  and  the  law  may  treat  them  as  it  finds  them.  The 
same  observations  apply  to  plate,  or  other  furniture  used  by  the 
importer. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  169 

We  think,  then,  that  the  act  under  which  the  plaintiffs  in  error 
•were  indicted  is  repugnant  to  that  article  of  the  Constitution  which 
declares,  that  "no  State  shall  lay  any  impost  or  duties  on  imports 
or  exports." 

Is  it  also  repugnant  to  that  clause  in  the  Constitution  which 
empowers  "Congress  to  regulate  commerce  with  foreign  nations, 
and  among  the  several  States,  and  with  Indian  tribes"  ? 

The  oppressed  and  degraded  state  of  commerce  previous  to  the 
adoption  of  the  Constitution  can  scarcely  be  forgotten.  It  was 
regulated  by  foreign  nations  with  a  single  view  to  their  own  inter- 
ests ;  and  our  disunited  efforts  to  counteract  their  restrictions  were 
rendered  impotent  by  want  of  combination.  Congress,  indeed, 
possessed  the  power  of  making  treaties;  but  the  inability  of  the 
Federal  government  to  enforce  them  had  become  so  apparent  as  to 
render  that  power  in  a  great  degree  useless.  Those  who  felt  the 
injury  arising  from  this  state  of  things,  and  those  who  were  capable 
of  estimating  the  influence  of  commerce  on  the  prosperity  of 
nations,  perceived  the  necessity  of  giving  the  control  over  this  im- 
portant subject  to  a  single  government.  It  may  be  doubted  whether 
any  of  the  evil  proceeding  from  the  feebleness  of  the  Federal  gov- 
ernment contributed  more  to  the  great  revolution  which  introduced 
the  present  system  than  the  deep  and  general  conviction  that  com- 
merce ought  to  be  regulated  by  Congress.  It  is  not,  therefore,  mat- 
ter of  surprise,  that  the  grant  should  be  as  extensive  as  the  mis- 
chief, and  should  comprehend  all  foreign  commerce  and  all  com- 
merce among  the  States.  To  construe  the  power  so  as  to  impair 
its  efficacy,  would  tend  to  defeat  an  object  in  the  attainment  of 
which  the  American  public  took,  and  justly  took,  that  strong  inter- 
est which  arose  from  a  full  conviction  of  its  necessity. 

What,  then,  is  the  just  extent  of  a  power  to  regulate  commerce 
with  foreign  nations,  and  among  the  several  States  ? 

This  question  was  considered  in  the  case  of  Gibbons  v.  Ogden, 
9  Wheat.  1,  in  which  it  was  declared  to  be  complete  in  itself,  and  to 
acknowledge  no  limitations  other  than  are  prescribed  by  the  Consti- 
tution. The  power  is  co-extensive  with  the  subject  on  which  it  acts, 
and  cannot  be  stopped  at  the  external  boundary  of  a  State,  but  must 
enter  its  interior.  *  *  *  * 

If  this  power  reaches  the  interior  of  a  State,  and  may  be  there 
exercised,  it  must  be  capable  of  authorizing  the  sale  of  those  arti- 
cles which  it  introduces.  Commerce  is  intercourse;  one  of  its  most 
ordinary  ingredients  is  traffic.  It  is  inconceivable  that  the  power  to 
authorize  this  traffic,  when  given  in  the  most  comprehensive  terms, 
with  the  intent  that  its  efficacy  should  be  complete,  should  cease  at 
the  point  when  its  continuance  is  indispensable  to  its  value.  To  what 
purpose  should  the  power  to  allow  importation  be  given,  unaccom- 
panied with  the  power  to  authorize  a  sale  of  the  thing  imported? 
Sale  is  the  object  of  importation,  and  is  an  essential  ingredient 
of  that  intercourse,  of  which  importation  constitutes  a  part.  It  is  as 


1 70  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

essential  an  ingredient,  as  indispensable  to  the  existence  of  the  entire 
thing,  then,  as  importation  itself.  It  must  be  considered  as  a 
component  part  of  the  power  to  regulate  commerce.  Congress  has 
a  right,  not  only  to  authorize  importation,  but  to  authorize  the  im- 
porter to  sell. 

We  think,  then,  that  if  the  power  to  authorize  a  sale  exists  in 
Congress,  the  conclusion  that  the  right  to  sell  is  connected  with 
the  law  permitting  importation,  as  an  inseparable  incident,  is  inevit- 
able. 

If  the  principles  we  have  stated  be  correct,  the  result  to  which 
they  conduct  us  cannot  be  mistaken.  Any  penalty  inflicted  on  the 
importer  for  selling  the  article,  in  his  character  of  importer,  must 
be  in  opposition  to  the  Act  of  Congress  which  authorizes  importa- 
tion. Any  change  on  the  introduction  and  incorporation  of  the 
articles  into  and  with  the  mass  of  property  in  the  country,  must  be 
hostile  to  the  power  given  to  Congress  to  regulate  commerce,  since 
an  essential  part  of  that  regulation,  and  principal  object  of  it,  is, 
to  prescribe  the  regular  means  for  accomplishing  that  introduction 
and  incorporation.  *  *  *  * 

We  think  there  is  error  in  the  judgment  of  the  Court  of  Appeals 
of  the  State  of  Maryland  imposing  the  penalty. 

Judgment  is  reversed. 


Note. — In  Almy  v.  California,  24  Howard,  169,  1860,  an  act  passed  by 
California  to  provide  revenue  from  a  stamp  tax  on  certain  instruments  of 
writing,  including  bills  of  lading  for  the  transportation  of  gold,  was  held 
to  be  equivalent  to  a  duty  upon  the  exportation  of  gold,  and  hence  repugnant 
to  the  Constitution  of  the  United  States,  which  in  express  terms  declares 
that  "no  State  shall,  without  the  consent  of  Congress,  lay  any  imposts  or 
duties  on  imports  or  exports,  except  what  may  be  absolutely  necessary  for 
executing  its  inspection  laws." 


ROBBINS  v.  SHELBY  COUNTY  TAXING  DISTRICT. 
120  U.  S.,  489.     1886. 

Sabine  Robbins,  the  defendant  in  the  lower  court,  was  engaged 
in  soliciting  sales  of  goods  in  the  city  of  Memphis,  Tennessee,  for 
the  firm  of  Rose,  Robbins  &  Co.,  of  Cincinnati,  Ohio.  In  obtaining 
orders  for  certain  paper  goods  and  stationery  which  he  was  selling, 
he  exhibited  samples  of  the  same — an  employment  usually  denom- 
inated as  that  of  a  "drummer."  A  statute  of  Tennessee,  relating 
to  taxation,  provided  "that  drummers,  and  all  persons  not  having 
a  regular  licensed  house  of  business  in  the  taxing  district  offering 
for  sale  or  selling  goods,  wares  or  merchandise  by  sample  shall  be 
required  to  pay  to  the  county  trustee  the  sum  of  $10  per  week,  or 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  171 

$25  per  month  for  such  privilege,  and  no  license  shall  be  issued  for 
a  longer  period  than  three  months."  The  statute  further  provided 
for  a  fine  and  imprisonment  in  case  of  the  violation  of  the  act. 
Under  this  law  Robbins,  who  had  not  paid  the  tax,  was  convicted 
and  sentenced  to  pay  a  fine.  The  Supreme  Court  of  the  State  of 
Tennessee  held  that  the  statute  was  constitutional  and  affirmed  the 
judgment  of  the  lower  court.  An  appeal  was  then  taken  to  the 
United  States  Supreme  Court  on  the  ground  that  the  statute  was 
repugnant  to  the  clause  of  the  Constitution  giving  to  Congress  the 
power  to  regulate  commerce  among  the  several  States. 

MR.  JUSTICE  BRADLEY  delivered  the  opinion  of  the  court. 

The  principal  question  argued  before  the  Supreme  Court  of 
Tennessee  was  as  to  the  constitutionality  of  the  act  which  imposed 
the  tax  on  drummers;  and  the  court  decided  that  it  was  constitu- 
tional and  valid. 

That  is  the  question  before  us,  and  it  is  one  of  great  importance 
to  the  people  of  the  United  States,  both  as  it  respects  their  business 
interests  and  their  constitutional  rights.  It  is  presented  in  a  nut- 
shell, and  does  not,  at  this  day,  require  for  its  solution  any  great 
elaboration  of  argument  or  review  of  authorities.  *  *  *  * 

In  a  word,  it  may  be  said  that  in  the  matter  of  interstate  com- 
merce the  United  States  are  but  one  country,  and  are  and  must  be 
subject  to  one  system  of  regulations,  and  not  to  a  multitude  of  sys- 
tems. The  doctrine  of  the  freedom  of  that  commerce,  except  as 
regulated  by  Congress,  is  so  firmly  established  that  it  is  unneces- 
sary to  enlarge  further  upon  the  subject. 

In  view  of  these  fundamental  principles,  which  are  to  govern  our 
decision,  we  may  approach  the  question  submitted  to  us  in  the 
present  case,  and  inquire  whether  it  is  competent  for  a  State  to  levy 
a  tax  or  impose  any  other  restriction  upon  the  citizens  or  inhabitants 
of  other  States,  for  selling  or  seeking  to  sell  their  goods  in  such 
State  before  they  are  introduced  therein.  Do  not  such  restrictions 
affect  the  very  foundation  of  interstate  trade?  How  is  a  manu- 
facturer, or  a  merchant,  of  one  State,  to  sell  his  goods  in  another 
State,  without,  in  some  way,  obtaining  orders  therefor?  Must  he 
be  compelled  to  send  them,  at  a  venture,  without  knowing  whether 
there  is  any  demand  for  them?  This  may,  undoubtedly,  be  safely 
done  with  regard  to  some  products  for  which  there  is  always  a 
market  and  a  demand,  or  where  the  course  of  trade  has  established 
a  general  and  unlimited  demand.  A  raiser  of  farm  produce  in 
New  Jersey  or  Connecticut,  or  a  manufacturer  of  leather  or  wooden 
ware,  may,  perhaps,  safely  take  his  goods  to  the  city  of  New  York 
and  be  sure  of  finding  a  staple  and  reliable  market  for  them.  But 
there  are  hundreds,  perhaps  thousands,  of  articles  which  no  person 
would  think  of  exporting  to  another  State  without  first  procuring 
an  order  for  them.  It  is  true,  a  merchant  or  manufacturer  in  one 
State  may  erect  or  hire  a  warehouse  or  store  in  another  State, 
in  which  to  place  his  goods,  and  await  the  chances  of  being  able  to 


172  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

sell  them.  But  this  would  require  a  warehouse  or  a  store  in  every 
State  with  which  he  might  desire  to  trade.  Surely,  he  cannot  be 
compelled  to  take  this  inconvenient  and  expensive  course.  In  cer- 
tain branches  of  business,  it  may  be  adopted  with  advantage.  Many 
manufacturers  do  open  houses  or  places  of  business  in  other  States 
than  those  in  which  they  reside,  and  send  their  goods  there  to  be 
kept  on  sale.  But  this  is  a  matter  of  convenience,  and  not  of  com- 
pulsion, and  would  neither  suit  the  convenience  nor  be  within  the 
ability  of  many  others  engaged  in  the  same  kind  of  business,  and 
would  be  entirely  unsuited  to  many  branches  of  business.  In  these 
cases,  then,  what  shall  the  merchant  or  manufacturer  do  who 
wishes  to  sell  his  goods  in  other  States?  Must  he  sit  still  in  his 
factory  or  warehouse,  and  wait  for  the  people  of  those  States  to 
come  to  him  ?  This  would  be  a  silly  and  ruinous  proceeding. 

The  only  other  way,  and  the  one,  perhaps,  which  most  extensively 
prevails,  is  to  obtain  orders  from  persons  residing  or  doing  busi- 
ness in  those  other  States.  But  how  is  the  merchant  or  manu- 
facturer to  secure  such  orders?  If  he  may  be  taxed  by  such  States 
for  doing  so,  who  shall  limit  the  tax?  It  may  amount  to  prohibi- 
tion. To  say  that  such  a  tax  is  not  a  burden  upon  interstate  com- 
merce is  to  speak  at  least  unadvisedly  and  without  due  attention  to 
the  truth  of  things. 

It  may  be  suggested  that  the  merchant  or  manufacturer  has  the 
post-office  at  his  command,  and  may  solicit  orders  through  the  mails. 
We  do  not  suppose,  however,  that  any  one  would  seriously  contend 
that  this  is  the  only  way  in  which  his  business  can  be  transacted 
without  being  amenable  to  exactions  on  the  part  of  the  State.  Be- 
sides, why  could  not  the  State  to  which  his  letters  might  be  sent, 
tax  him  for  soliciting  orders  in  this  way,  as  well  as  in  any  other 
way? 

The  truth  is,  that,  in  numberless  instances,  the  most  feasible,  if 
not  the  only  practicable,  way  for  the  merchant  or  manufacturer  to 
obtain  orders  in  other  States  is  to  obtain  them  by  personal  applica- 
tion, either  by  himself,  or  by  some  one  employed  by  him  for  that 
purpose;  and  in  many  branches  of  business  he  must  necessarily 
exhibit  samples  for  the  purpose  of  determining  the  kind  and  quality 
of  the  goods  he  proposes  to  sell,  or  which  the  other  party  desires  to 
purchase.  But  the  right  of  taxation,  if  it  exists  at  all,  is  not  con- 
fined to  selling  by  sample.  It  embraces  every  act  of  sale,  whether 
by  word  of  mouth  only,  or  by  the  exhibition  of  samples.  If  the 
right  exists,  any  New  York  or  Chicago  merchant  visiting  New 
Orleans  or  Jacksonville,  for  pleasure  or  for  his  health,  and  casually 
taking  an  order  for  goods  to  be  sent  from  his  warehouse,  could  be 
made  liable  to  pay  a  tax  for  so  doing,  or  be  convicted  of  a  misde- 
meanor for  not  having  taken  out  a  license.  This  right  to  tax  would 
apply  equally  as  well  to  the  principal  as  to  his  agent,  and  to  a  single 
act  of  sale  as  to  a  hundred  acts.  *  *  *  * 

It  is  strongly  urged,  as  if  it  were  a  material  point  in  the  case,  that 
no  discrimination  is  made  between  domestic  and  foreign  drummers 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  173 

—those  of  Tennessee  and  those  of  other  States;  that  all  are  taxed 
alike.  But  that  does  not  meet  the  difficulty.  Interstate  commerce 
cannot  be  taxed  at  all,  even  though  the  same  amount  of  tax  should 
be  laid  on  domestic  commerce,  or  that  which  is  carried  on  solely 
within  the  State.  This  was  decided  in  the  case  of  The  State 
Freight  Tax,  15  Wall.  232.  The  negotiation  of  sales  of  goods  which 
are  in  another  State,  for  the  purpose  of  introducing  them  into  the 
State  in  which  the  negotiation  is  made,  is  interstate  commerce.  A 
New  Orleans  merchant  cannot  be  taxed  there  for  ordering  goods 
from  London  or  New  York,  because,  in  the  one  case,  it  is  an  act  of 
foreign,  and,  in  the  other,  of  interstate  commerce,  both  of  which 
are  subject  to  regulation  by  Congress  alone. 

It  would  not  be  difficult,  however,  to  show  that  the  tax  authorized 
by  the  State  of  Tennessee  in  the  present  case  is  discriminative 
against  the  merchants  and  manufacturers  of  other  States.  They  can 
only  sell  their  goods  in  Memphis  by  the  employment  of  drummers 
and  by  means  of  samples ;  whilst  the  merchants  and  manufacturers 
of  Memphis,  having  regular  licensed  houses  of  business  there,  have 
no  occasion  for  such  agents,  and,  if  they  had,  they  are  not  subject 
to  any  tax  therefor.  They  are  taxed  for  their  licensed  houses,  it  is 
true ;  but  so,  it  is  presumable,  are  the  merchants  and  manufacturers 
of  other  States  in  the  places  where  they  reside;  and  the  tax  on 
drummers  operates  greatly  to  their  disadvantage  in  comparison  with 
the  merchants  and  manufacturers  of  Memphis.  And  such  was  un- 
doubtedly one  of  its  objects.  This  kind  of  taxation  is  usually  im- 
posed at  the  instance  and  solicitation  of  domestic  dealers,  as  a 
means  of  protecting  them  from  foreign  competition.  And  in  many 
cases  there  may  be  some  reason  in  their  desire  for  such  protection. 
But  this  shows  in  a  still  stronger  light  the  unconstitutionality  of  the 
tax.  It  shows  that  it  not  only  operates  as  a  restriction  upon  inter- 
state commerce,  but  that  it  is  intended  to  have  that  effect  as  one 
of  is  principal  objects.  And  if  a  State  can,  in  this  way,  impose 
restrictions  upon  interstate  commerce  for  the  benefit  and  protection 
of  its  own  citizens,  we  are  brought  back  to  the  condition  of  things 
which  existed  before  the  adoption  of  the  Constitution,  and  which 
was  one  of  the  principal  causes  that  led  to  it. 

The  judgment  of  the  Supreme  Court  of  Tennessee  is  reversed, 
and  the  plaintiff  in  error  discharged. 


Note  1.— In  Browning  v.  City  of  Waycross,  233  U.  S.  16  (April  6th,  1914), 
one  E.  A.  Browning  was  convicted  of  violating  an  ordinance  of  the  city  of 
Waycross,  Georgia,  which  imposed  an  annual  occupation  tax  of  $25  upon 
"Lightning  rod  agents  or  dealers  engaged  in  putting  up  lightning  rods" 
within  the  city.  Browning,  who  represented  a  Missouri  corporation,  solicit- 
ing orders  and  erecting  the  rods  without  extra  charge  to  the  purchasers  upon 
receiving  the  same  from  St.  Louis,  Missouri,  contended  that  he  was  carrying 
on  interstate  commerce,  which  the  city  could  not  thus  tax  without  violating 
the  Constitution.  The  Supreme  Court  of  the  United  States  affirmed  the  con- 


174  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

viction,  deciding  that  the  matter  was  within  the  regulating  power  of  the  State 
and  hot  the  subject  of  interstate  commerce,  for  the  following  reasons:  "(a) 
Because  the  affixing  of  lightning  rods  to  houses  was  the  carrying  on  of  a 
business  of  a  strictly  local  character,  peculiarly  within  the  exclusive  control 
of  State  authority,  (b)  Because,  besides,  such  business  was  wholly  separate 
from  interstate  commerce,  involved  no  question  of  the  delivery  of  property 
shipped  in  interstate  commerce,  or  of  the  right  to  complete  an  interstate 
commerce  transaction,  but  concerned  merely  the  doing  of  a  local  act  after 
interstate  commerce  had  completely  terminated.  It  is  true  that  it  was 
shown  that  the  contract  under  which  the  rods  were  shipped  bound  the  seller, 
at  his  own  expense,  to  attach  the  rods  to  the  houses  of  the  persons  who 
ordered  rods,  but  it  was  not  within  the  power  of  the  parties  by  the  form 
of  their  contract  to  convert  what  was  exclusively  a  local  business,  subject 
to  State  control,  into  an  interstate  commerce  business,  protected  by  the 
commerce  clause." 

Note  2.— In  Caldwell  v.  North  Carolina,  187  U.  S.  622,  there  was  at  issue 
the  validity  of  an  ordinance  of  the  village  of  Greensboro,  North  Carolina, 
which  imposed  a  tax  upon  the  business  of  selling  or  delivering  picture  frames 
and  photographs.  The  question  was  whether  Caldwell,  the  agent  of  an 
Illinois  corporation,  was  liable  for  this  tax,  because  in  Greensboro  he  had 
taken  from  a  railroad  freight  office  certain  packages  of  frames  and  pictures 
which  were  awaiting  delivery,  and  which  had  been  shipped  to  Greensboro 
by  the  selling  corporation  to  its  own  order,  for  the  purpose  of  filling  orders 
previously  obtained  by  its  agents  in  North  Carolina.  After  the  frames  and 
pictures,  which  had  been  shipped  in  separate  packages  from  Chicago,  were 
received  by  Caldwell,  they  were  fitted  together  in  a  room  in  a  hotel,  and 
were  delivered  to  those  who  had  ordered  them.  It  was  contended  that  the 
act  of  Caldwell  in  receiving  the  pictures  and  frames  and  bringing  them 
together  was  not  under  the  protection  of  the  commerce  clause,  but  was  the 
transaction  of  local  business  after  the  termination  of  interstate  commerce. 
It  was  adjudged  that  as  both  the  pictures  and  frames  had  been  ordered 
from  another  State,  and  their  shipment  was  the  fulfillment  of  an  interstate 
commerce  transaction,  the  mere  fact  that  they  were  shipped  in  separate 
packages  and  brought  together  at  the  termination  of  the  transit  did  not 
amount  to  the  transaction  of  business  within  North  Carolina  which  the 
State  could  tax  without  placing  a  direct  burden  upon  interstate  commerce. 

Note  3. — In  Singer  Sewing  Machine  Company  v.  Birchell,  233  U.  S.  304 
(April  6th,  1914),  the  State  of  Alabama,  under  the  Act  of  March  31st,  1911, 
taxed  every  person,  firm  or  corporation  selling  or  delivering  sewing  machines 
$50  annually  for  each  county  in  which  the  said  articles  were  sold,  and  $25 
annually  in  each  county  for  every  wagon  and  team  used  in  delivering  or 
displaying  such  machines.  The  act  exempted  from  the  tax  "merchants  sell- 
ing the  said  articles  at  their  regularly  established  places  of  business."  The 
Singer  Sewing  Machine  Company,  a  New  Jersey  corporation,  sold  and  rented 
machines  in  Alabama,  in  part  from  regularly  established  places  of  business 
and  in  part  from  delivery  wagons  going  from  place  to  place  in  the  respective 
counties.  The  company  contended  that  the  act  was  a  burden  upon  interstate 
commerce,  and  discriminated  against  itinerant  sellers  of  machines.  The 
Supreme  Court  of  the  United  States  held  the  statute  was  valid,  saying: 
"The  statute  under  consideration  does  not  in  direct  terms  or  by  necessary 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  175 

inference  manifest  an  intent  to  regulate  or  burden  interstate  commerce. 
*  *  *  *  The  statute  provides  for  a  license  or  occupation  tax.  Normally, 
as  the  averments  of  the  bill  sufficiently  show,  the  occupation  may  be  and  is 
conducted  wholly  intrastate,  and  free  from  any  element  of  interstate  com- 
merce. *  *  *  *  In  each  county  there  is  a  store  or  regular  place  of 
business,  from  which  all  of  the  local  agents  for  the  same  county  are  supplied 
with  sewing  machines  and  appurtenances  that  are  to  be  taken  into  the  rural 
districts  for  the  sale  or  renting,  and  all  transactions  that  enter  into  the  sale 
or  renting  are  completely  carried  out  within  a  single  county."  The  court 
decided,  also,  there  was  no  unlawful  discrimination,  and  said :  "The  State 
has  a  wide  range  of  discretion  with  respect  to  establishing  classes  for  the 
purpose  of  imposing  revenue  taxes,  and  its  laws  upon  the  subject  are  not 
to  be  set  aside  as  discriminatory  unless  it  clearly  appears  that  there  is  no 
rational  basis  for  the  classification." 

Note  4.— In  Steward  v.  State  of  Michigan,  232  U.  S.  665  (decided  March  23rd, 
1914),  the  Supreme  Court  decided  that  a  State  may  not,  consistently  with  the 
commerce  clause  of  the  Constitution,  impose  a  license  tax  upon  a  non-resident 
merchant  traveling  from  place  to  place  within  the  State,  and  soliciting  orders, 
by  sample,  lists  and  catalogues,  for  goods  which  are  afterwards  shipped  into 
the  State  in  carload  lots  to  his  order,  and  which  he  delivers  from  the  cars 
to  the  persons  ordering  them. 


STATE  TONNAGE  TAX  CASES. 
12  WALLACE,  204.     1870. 

The  State  of  Alabama  passed  a  statute  on  February.  22,  1866, 
imposing  a  tax  "on  all  steamboats,  vessels,  and  other  water  crafts 
plying  in  the  navigable  waters  of  the  State.  *  *  *  *  at  the 
rate  of  $1  per  ton  of  the  registered  tonnage  thereof."  The  question 
in  these  cases  was  whether  this  statute  conflicted  with  the  clause  of 
the  Constitution  of  the  United  States  ordaining  that  "no  State  shall 
without  the  consent  of  Congress  lay  any  duty  of  tonnage." 

MR.  JUSTICE  CLIFFORD  delivered  the  judgment  of  the  court. 

The  word  tonnage,  as  applied  to  American  ships  and  vessels, 
must  be  held  to  mean  their  entire  internal  cubical  capacity,  or  con- 
tents of  the  ship  or  vessel  expressed  in  tons  of  100  cubical  feet 
each. 

Taxes  levied  by  a  State  upon  ships  and  vessels  owned  by  the  cit- 
izens of  the  State  as  property,  based  on  a  valuation  of  the  same  as 
property,  are  not  within  the  prohibition  of  the  Constitution,  but  it  is 
equally  clear  and  undeniable  that  taxes  levied  by  a  State  upon  ships 
and  vessels  as  instruments  of  commerce  and  navigation  are  within 
that  clause  of  the  instrument  which  prohibits  the  States  from 
levying  any  duty  of  tonnage,  without  the  consent  of  Congress ;  and 
it  makes  no  difference  whether  the  ships  or  vessels  taxed  belong  to 
the  citizens  of  the  State  which  levies  the  tax  or  the  citizens  of  an- 


176  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

other  State,  as  the  prohibition  is  general.  *  *  *  *  The  court 
is  of  the  opinion  that  the  State  law  levying  the  taxes  in  this  case  is 
unconstitutional  and  void. 


THOMPSON  v.  UNION  PACIFIC  RAILROAD  COMPANY. 
9  WALLACE,    579.     1869. 

The  stockholders  of  the  Union  Pacific  Railroad  Company,  which 
was  incorporated  by  the  territory  of  Kansas,  brought  suit  in  the 
United  States  Circuit  Court  for  the  District  of  Kansas  to  restrain 
the  officers  of  the  company  from  paying  a  tax  levied  by  the  State 
of  Kansas  on  the  property  of  the  company  in  that  State.  The  stock- 
holders contended  that  as  the  company  enjoyed  certain  franchises 
granted  by  Congress,  in  return  for  which  they  were  to  carry  United 
States  mail  and  transport  troops  in  time  of  war,  etc.,  the  State 
was  in  reality  taxing  a  Federal  agency  and  hence  the  tax  was  uncon- 
stitutional as  applied  to  the  Union  Pacific  Railroad  Company.  The 
judges  of  the  Circuit  Court  were  divided  in  their  opinion,  so  the 
case  was  certified  to  the  Supreme  Court  of  the  United  States. 

MR.  CHIEF  JUSTICE  CHASE  delivered  the  opinion  of  the  court. 

The  main  argument  for  the  complainants,  however,  is  that  the 
road,  being  constructed  under  the  direction  and  authority  of  Con- 
gress, for  the  uses  and  purposes  of  the  United  States,  and  being  a 
part  of  a  system  of  roads  thus  constructed,  is  therefore  exempt 
from  taxation  under  State  authority.  It  is  to  be  observed  that  this 
exemption  is  not  claimed  under  any  act  of  Congress.  It  is  not 
asserted  that  any  act  declaring  such  exemption  has  ever  received 
the  sanction  of  the  National  legislature.  But  it  is  earnestly  insisted 
that  the  right  of  exemption  arises  from  the  relations  of  the  road  to 
the  General  Government.  It  is  urged  that  the  aids  granted  by 
Congress  to  the  road  were  granted  in  the  exercise  of  its  constitu- 
tional powers  to  regulate  commerce,  to  establish  post-offices  and 
post-roads,  to  raise  and  support  armies,  and  to  suppress  insurrection 
and  invasion ;  and  that  by  the  legislation  which  supplied  aid,  re- 
quired security,  imposed  duties,  and  finally  exacted,  upon  a  certain 
contingency,  a  percentage  of  income,  the  road  was  adopted  as  an 
instrument  of  the  government,  and  as  such  was  not  subject  to  taxa- 
tion by  the  State. 

The  case  of  McCulloch  v.  Maryland  is  much  relied  on  in  support 
of  this  position.  But  we  apprehend  that  the  reasoning  of  the  court 
in  that  case  will  hardly  warrant  the  conclusion  which  counsel  de- 
duce from  it  in  this.  In  that  case  the  main  questions  were,  Whether 
the  incorporation  of  the  Bank  of  the  United  States,  with  power  to 
establish  branches,  was  an  act  of  legislation  within  the  constitutional 
power  of  Congress,  and,  whether  the  bank  and  its  branches,  as 
actually  established,  were  exempt  from  taxation  by  State  legislation. 
Both  questions  were  resolved  in  the  affirmative.  *  *  *  * 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  177 

It  is  unquestionably  true  that  the  court,  in  determining  the  second 
general  question,  already  stated,  did  hold  that  the  Bank  of  the 
United  States,  with  its  branches,  was  exempt  from  taxation  by  the 
State  of  Maryland,  although  no  express  exemption  was  found  in 
the  charter.  But  it  must  be  remembered  that  the  Bank  of  the  Unit- 
ed States  was  a  corporation  created  by  the  United  States;  and,  as 
an  agent  in  the  execution  of  the  constitutional  powers  of  the  gov- 
renment,  was  endowed  by  the  act  of  creation  with  all  its  faculties, 
powers,  and  functions.  It  did  not  owe  its  existence,  or  any  of  its 
qualities,  to  State  legislation.  And  its  exemption  from  taxation 
was  put  upon  this  ground.  Nor  was  the  exemption  itself  without 
important  limitations.  It  was  declared  not  to  extend  to  the  real 
property  of  the  bank  within  the  State ;  nor  to  interests  held  by  citi- 
zens of  the  State  in  the  institution. 

In  like  manner  other  means  and  operations  of  the  government 
have  been  held  to  be  exempt  from  State  taxation:  as  bonds  issued 
for  money  borrowed,  Weston  v.  City  of  Charleston,  2  Pet.  467: 
certificates  of  indebtedness  issued  for  money  or  supplies.  The 
Banks  v.  The  Mayor,  7  Wall.  24;  bills  of  credit  issued  for  circula- 
tion, Bank  v.  Supervisors,  Ib.  28.  There  are  other  instances  in 
which  exemption,  to  the  extent  it  is  established  in  McCulloch  v. 
Maryland,  might  have  been  held  to  arise  from  the  simple  creation 
and  organization  of  corporations  under  acts  of  Congress,  as  in  the 
case  of  the  National  Banking  Associations ;  but  in  which  Congress 
thought  fit  to  prescribe  the  extent  to  which  State  taxation  may  be 
applied.  Van  Allen  v.  The  Assessors,  3  Id.  573 ;  Bradley  v.  The 
People,  4  Id.  459;  People  v.  Commissioners,  Ib.  244.  In  all  these 
cases,  as  in  the  case  of  the  Bank  of  the  United  States,  exemption 
from  liability  to  taxation  was  maintained  upon  the  same  ground. 
The  State  tax  held  to  be  repugnant  to  the  Constitution  was  imposed 
directly  upon  an  operation  or  an  instrument  of  the  government. 
That  such  taxes  cannot  be  imposed  on  the  operations  of  the  gov- 
ernment, is  a  proposition  which  needs  no  argument  to  support  it. 
And  the  same  reasoning  will  apply  to  instruments  of  the  govern- 
ment, created  by  itself  for  public  and  constitutional  ends.  But  we 
are  not  aware  of  any  case  in  which  the  real  estate,  or  other  property 
of  a  corporation  not  organized  under  an  act  of  Congress,  has  been 
held  to  be  exempt,  in  the  absence  of  express  legislation  to  that 
effect,  to  just  contribution,  in  common  with  other  property,  to 
the  general  expenditure  for  the  common  benefit,  because  of  the 

employment  of  the  corporation  in  the  service  of  the  government. 

*     *     *     * 

We  do  not  doubt  the  propriety  or  the  necessity,  under  the  Con- 
stitution, of  maintaining  the  supremacy  of  the  General  Government 
within  its  constitutional  sphere.  We  fully  recognize  the  soundness 
of  the  doctrine,  that  no  State  has  a  "right  to  tax  the  means  employed 
by  the  government  of  the  Union  for  the  execution  of  its  powers." 
But  we  think  there  is  a  clear  distinction  between  the  means  employed 
by  the  government  and  the  property  of  agents  employed  by  the 
government.  Taxation  of  the  agency  is  taxation  of  the  means ; 


1 78  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

taxation  of  the  property  of  the  agent  is  not  always,  or  generally, 
taxation  of  the  means. 

No  one  questions  that  the  power  to  tax  all  property,  business,  and 
persons,  within  their  respective  limits,  is  original  in  the  States  and 
has  never  been  surrendered.  It  cannot  be  so  used,  indeed,  as  to 
defeat  or  hinder  the  operations  of  the  National  government;  but  it 
will  be  safe  to  conclude,  in  general,  in  reference  to  persons  and 
State  corporations  employed  in  government  service,  that  when 
Congress  has  not  interposed  to  protect  their  property  from  State 
taxation,  such  taxation  is  not  obnoxious  to  that  objection.  Lane 
County  v.  Oregon,  7  Wall.  77.  *  *  *  * 

The  nature  of  the  claims  to  exemption  which  would  be  set  up, 
is  well  illustrated  by  that  which  is  advanced  in  behalf  of  the  com- 
plainants in  the  case  before  us.  The  very  ground  of  claim  is  in 
the  bounties  of  the  General  Government.  The  allegation  is,  that 
the  government  has  advanced  large  sums  to  aid  in  construction  of 
the  road;  has  contented  itself  with  the  security  of  a  second  mort- 
gage; has  made  large  grants  of  land  upon  no  condition  of  benefit 
to  itself  except  that  the  company  will  perform  certain  services  for 
full  compensation,  independently  of  those  grants ;  and  will  admit 
the  government  to  a  very  limited  and  wholly  contingent  interest  in 
remote  net  income.  And  because  of  these  advances  and  these 
grants,  and  this  fully  compensated  employment,  it  is  claimed  that 
this  State  corporation,  owing  its  being  to  State  law,  and  indebted 
for  these  benefits  to  the  consent  and  active  interposition  of  the 
State  legislature,  has  a  constitutional  right  to  hold  its  property  ex-^ 
empt  from  State  taxation,  and  this  without  any  legislation  on  the 
part  of  Congress  which  indicates  that  such  exemption  is  deemed 
essential  to  the  full  performance  of  its  obligations  to  the  govern- 
ment. 

We  are  unable  to  find  in  the  Constitution  any  warrant  for  the 
exemption  from  State  taxation  claimed  in  behalf  of  the  complain- 
ants ;  and  must,  therefore,  answer  the  question  certified  to  us 

In  the  affirmative. 


UNION  PACIFIC  RAILROAD  COMPANY  v.  PENISTON. 
18  WALLACE,  5.     1873. 

The  State  of  Nebraska  taxed  the  property  of  the  Union  Pacific 
Railroad  Company  in  that  State  and  the  same  question  was  raised 
as  in  Thompson  v.  Union  Pacific  Railroad  Company.  There  was 
one  point  of  difference,  however,  which  the  opinion  of  the  Court 
brings  out  clearly. 

MR.  JUSTICE  STRONG  delivered  the  opinion  of  the  court. 

It  is,  however,  insisted  that  the  case  of  Thompson  v.  The  Union 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  179 

Pacific  Railroad  Company  differs  from  the  case  we  have  now  in 
hand  in  the  fact  that  it  was  incorporated  by  the  Territorial  legis- 
lature and  the  legislature  of  the  State  of  Kansas,  while  these  com- 
plainants were  incorporated  by  Congress.  We  do  not  perceive  that 
this  presents  any  reason  for  the  application  of  a  rule  different  from 
that  which  was  applied  in  the  former  case.  *  *  *  * 

It  is,  therefore,  manifest  that  exemption  of  Federal  agencies 
from  State  taxation  is  dependent,  not  upon  the  nature  of  the  agents, 
or  upon  the  mode  of  their  constitution,  or  upon  the  fact  that  they 
are  agents,  but  upon  the  effect  of  the  tax;  that  is,  upon  the  ques- 
tion whether  the  tax  does  in  truth  deprive  them  of  power  to  serve 
the  government  as  they  were  intended  to  serve  it,  or  does  hinder 
the  efficient  exercise  of  their  power.  A  tax  upon  their  property  has 
no  such  necessary  effect.  It  leaves  them  free  to  discharge  the 
duties  they  have  undertaken  to  perform.  A  tax  upon  their  opera- 
tions is  a  direct  obstruction  to  the  exercise  of  Federal  powers. 


CALIFORNIA   v.    CENTRAL    PACIFIC    RAILROAD    COM- 
PANY. 

t 
127  U.  S.  1.     1887. 

The  State  of  California  laid  a  tax  upon  certain  property  of 
transportation  companies,  including  franchises  conferred  by  the 
United  States.  The  State  brought  suit  to  collect  the  tax  in  its  own 
courts,  but  the  railroads  removed  the  suits  to  the  United  States 
Circuit  Court.  The  Central  Pacific  and  other  railroad  companies 
resisted  the  tax  on  the  ground  that  the  State  could  not  constitu- 
tionally levy  such  a  tax.  The  Circuit  Court  gave  judgment  for 
the  railroad,  whereupon  an  appeal  was  taken  to  the  Supreme  Court 
of  the  United  States. 

MR.  JUSTICE  BRADLEY  delivered  the  opinion  of  the  court. 

*  *  *  *  Assuming,  then,  that  the  Central  Pacific  Railroad 
Company  has  received  the  important  franchises  referred  to  by  grant 
of  the  United  States,  the  question  arises  whether  they  are  legitimate 
subjects  of  taxation  by  the  State.  They  were  granted  to  the  com- 
pany for  national  purposes  and  to  subserve  national  ends.  It  seems 
very  clear  that  the  State  of  California  can  neither  take  them  away, 
nor  destroy  nor  abridge  them,  nor  cripple  them  by  onerous  burdens. 
Can  it  tax  them?  It  may  undoubtedly  tax  outside  visible  property 
of  the  company,  situated  within  the  State.  That  is  a  different  thing. 
But  may  it  tax  franchises  which  are  the  grant  of  the  United  States  ? 
In  our  judgment,  it  cannot.  What  is  a  franchise?  Under  the 
English  law  Blackstone  defines  it  as  "a  royal  privilege  or  branch 
of  the  king's  prerogative,  subsisting  in  the  hands  of  a  subject."  2 
Bl.  Com.  37.  Generalized,  and  divested  of  the  special  form  which 


i8o  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

it  assumes  under  a  monarchial  government  based  on  feudal  tradi- 
tions, a  franchise  is  a  right,  privilege  or  power  of  public  concern, 
which  ought  not  to  be  exercised  by  private  individuals  at  their  mere 
will  and  pleasure,  but  should  be  reserved  for  public  control  and  ad- 
ministration, either  by  the  government  directly,  or  by  public  agents, 
acting  under  such  conditions  and  regulations  as  the  government 
may  impose  in  the  public  interest,  and  for  the  public  security.  Such 
rights  and  powers  must  exist  under  every  form  of  society.  They 
are  always  educed  by  the  laws  and  customs  of  the  community. 
Under  our  system,  their  existence  and  disposal  are  under  the  con- 
trol of  the  legislative  department  of  the  government,  and  they  cannot 
be  assumed  or  exercised  without  legislative  authority.  No  private 
person  can  establish  a  public  highway,  or  a  public  ferry,  or  railroad, 
or  charge  tolls  for  the  use  of  the  same,  without  authority  from  the 
legislature,  direct  or  derived.  These  are  franchises.  No  private 
person  can  take  another's  property,  even  for  a  public  use,  without 
such  authority;  which  is  the  same  as  to  say,  that  the  right  of  em- 
inent domain  can  only  be  exercised  by  virtue  of  a  legislative  grant. 
This  is  a  franchise.  No  persons  can  make  themselves  a  body  cor- 
porate and  politic  without  legislative  authority.  Corporate  capacity 
is  a  franchise.  The  list  might  be  continued  indefinitely. 

In  view  of  this  description  of  the  nature  of  a  franchise,  how  can 
it  be  possible  that  a  franchise  granted  by  Congress  can  be  subject 
to  taxation  by  a  State  without  the  consent  of  Congress?  Taxation 
is  a  burden,  and  may  be  laid  so  heavily  as  to  destroy  the  thing  taxed, 
or  render  it  valueless.  As  Chief  Justice  Marshall  said  in  Mc- 
Culloch  v.  Maryland,  "the  power  to  tax  involves  the  power  to 
destroy."  *  *  *  * 

The  taxation  of  a  corporate  franchise  merely  as  such,  unless  pur- 
suant to  a  stipulation  in  the  original  charter  of  the  company,  is  the 
exercise  of  an  authority  somewhat  arbitrary  in  its  character.  It  has 
no  limitation  but  the  discretion  of  the  taxing  power.  The  value  of 
the  franchise  is  not  measured  like  that  of  property,  but  may  be  ten 
thousand  or  ten  hundred  thousand  dollars,  as  the  legislature  may 
choose.  Or,  without  any  valuation  of  the  franchise  at  all,  the  tax 
may  be  arbitrarily  laid.  It  is  not  an  idle  objection,  therefore,  made 
by  the  company  against  the  tax  imposed  in  the  present  cases. 

Judgment  affirmed. 


MAINE  v.  GRAND  TRUNK  RAILWAY  COMPANY. 
142  U.  S.,  217.     1891. 

The  State  of  Maine  in  1881  passed  a  statute  providing  that  every 
corporation  operating  a  railroad  in  the  State  was  to  pay  an  annual 
franchise  tax  for  the  privilege  of  exercising  its  franchises  in  the 
State.  The  amount  of  the  tax  to  be  paid  was  to  be  determined  by 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  181 

the  amount  of  the  corporation's  gross  transportation  receipts.  The 
act  further  provided  that  when  applied  to  a  railroad  lying  partly 
within  and  partly  without  the  State,  the  tax  should  be  assessed  upon 
that  proportion  of  the  gross  receipts  which  the  number  of  miles  of 
the  railroad  in  the  State  bore  to  the  whole  number  of  miles  of  rail- 
road operated  by  the  corporation.  The  lines  of  the  Grand  Trunk 
Railway  Company  were  partly  within  and  partly  without  the  State 
of  Maine  and  the  railway  company  resisted  the  payment  of  the  tax 
on  the  ground  that  it  was  void  as  a  regulation  of  interstate  com- 
merce. The  State  of  Maine  brought  an  action  in  its  own  courts 
to  recover  the  amount  of  the  tax  assessed  upon  the  Grand  Trunk 
Railway  Company,  but  on  application  of  the  defendant  railway  the 
case  was  transferred  to  the  Circuit  Court  of  the  United  States, 
which  court  held  that  this  tax  was  a  regulation  of  interstate  com- 
merce and  gave  judgment  for  the  defendant  railway,  whereupon 
the  State  took  an  appeal  to  the  United  States  Supreme  Court. 

MR.  JUSTICE  FIELD  delivered  the  opinion  of  the  court : 

The  privilege  of  exercising  the  franchise  of  a  corporation  within 
a  State  is  generally  one  of  value,  and  often  of  great  value,  and  the 
subject  of  earnest  contention.  It  is  natural,  therefore,  that  the 
corporation  should  be  made  to  bear  some  proportion  of  the  burdens 
of  government.  As  the  granting  of  the  privilege  rests  entirely  in 
the  discretion  of  the  State,  whether  the  corporation  be  of  domestic 
or  foreign  origin,  it  may  be  conferred  upon  such  conditions,  pe- 
cuniary or  otherwise,  as  the  State  in  its  judgment  may  deem  most 
conducive  to  its  interests  or  policy.  It  may  require  the  payment 
into  its  treasury,  each  year,  of  a  specific  sum,  or  may  apportion 
the  amount  exacted  according  to  the  value  of  the  business  permit- 
ted, as  disclosed  by  its  gains  or  receipts  of  the  present  or  past  years. 
The  character  of  the  tax,  or  its  validity,  is  not  determined  by  the 
mode  adopted  in  fixing  its  amount  for  any  specific  period  or  the 
times  of  its  payment.  *  *  *  *  The  rule  of  apportioning  the 
charge  to  the  receipts  of  the  business  would  seem  to  be  eminently 
reasonable,  and  likely  to  produce  the  most  satisfactory  results,  both 
to  the  State  and  the  corporation. 

The  court  below  held  that  the  imposition  of  the  taxes  was  a  regu- 
lation of  commerce,  interstate  and  foreign,  and  therefore  in  conflict 
with  the  exclusive  power  of  Congress  in  that  respect;  and  on  that 
ground  alone  it  ordered  judgment  for  the  defendant.  This  ruling 
was  founded  upon  the  assumption  that  a  reference  by  the  statute 
to  the  transportation  receipts  and  to  a  certain  percentage  of  the 
same  in  determining  the  amount  of  the  excise  tax,  was  in  effect 
the  imposition  of  the  tax  upon  such  receipts,  and  therefore  an 
interference  with  interstate  and  foreign  commerce.  But  a  resort 
to  those  receipts  was  simply  to  ascertain  the  value  of  the  business 
done  by  the  corporation,  and  thus  obtain  a  guide  to  a  reasonable 
conclusion  as  to  the  amount  of  the  excise  tax  which  should  be 
levied ;  and  we  are  unable  to  perceive  in  that  resort  any  interference 
with  transportation,  domestic  or  foreign,  over  the  road  of  the  rail- 


1 82  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

road  company,  or  any  regulation  of  commerce  which  consists  in 
such  transportation. 

Reversed,  and  cause  remanded  with  directions  to  enter  judgment 
in  favor  of  the  State  for  the  amount  of  taxes  demanded. 


ADAMS  EXPRESS  COMPANY  v.  OHIO  STATE  AUDITOR. 
165  U.  S.  194.     1897. 

The  Ohio  Statute  of  April  27th,  1893,  as  amended  May  10th,  1894, 
known  as  the  "Nichols  Law,"  provided  for  the  taxation  of  telegraph, 
telephone  and  express  companies.  Under  the  Statute  such  com- 
panies doing  business  in  the  state  were  required  to  file  a  return  set- 
ting forth  the  amount,  number  and  value  of  the  shares  of  their 
capital  stock,  and  also  a  statement  in  detail  of  their  entire  real  and 
personal  property,  and  where  the  same  was  located.  Express  com- 
panies were  required  to  include  in  the  return  a  statement  of  the  en- 
tire gross  receipts,  of  their  business,  from  whatever  source  derived, 
for  each  year,  and  of  the  business  done  in  the  State  of  Ohio,  giving 
the  receipts  of  each  office  in  the  State ;  also  the  whole  length  of  the 
lines  of  rail  and  water  routes  over  which  the  companies  did  busi- 
ness within  and  without  the  state.  The  rule  to  be  followed  in 
making  the  assessments  was  as  follows :  "In  determining  the  value 
of  the  property  of  said  companies  in  this  state,  to  be  taxed  within 
the  state  and  assessed  as  herein  provided,  said  board  (board  of  ap- 
praisers) shall  be  guided  by  the  value  of  said  property  as  determined 
by  the  value  of  the  entire  capital  stock  of  said  companies,  and  such 
other  evidence  and  rules  as  will  enable  said  board  to  arrive  at  the 
true  value  in  money  of  the  entire  property  of  said  companies  within 
the  State  of  Ohio,  in  the  proportion  which  the  same  bears  to  the 
entire  property  of  said  companies,  as  determined  by  the  value  of 
the  capital  stock  thereof,  and  the  other  evidences  and  rules  as  afore- 
said." The  valuation  of  the  real  estate  of  the  companies 
situate  in  Ohio  was  required  to  be  deducted  from  the  total 
valuation  as  fixed  by  the  Board.  The  property  of  the  Adams  Ex- 
press Company  within  the  State  of  Ohio  was  valued  and  assessed 
for  taxation  in  1895  in  the  sum  of  $533,095.80.  The  express  com- 
pany made  no  return  of  the  entire  gross  receipts  of  its  business 
wherever  done.  It  made  return  that  aside  from  its  real  estate,  the 
company  owned  no  property  in  the  State  of  Ohio,  except  "certain 
horses,  wagons,  harness,  trucks  and  office  fixtures  located  at  differ- 
ent points"  and  their  actual  value  was  given  in  the  return.  The  com- 
pany set  forth  that  "it  employed  many  thousands  of  men  who  were 
constantly  engaged  in  carrying  express  packages,  many  of  them  of 
great  value,  from  one  part  of  the  country  to  another,  and  its  income 
and  the  value  of  its  snares  were  largely  the  result  of  their  efforts, 
fidelity  and  integrity  and  of  skilful  management  and  supervision 
of  the  business."  It  also  contended  that  it  owned  real  and  personal 


SELECTED  CASES  IN  CONSTITUTION AI.  LAW  183 

property  of  great  value  aside  from  the  appliances  of  its  express  busi- 
ness, which  was  not  held  or  taxable  in  the  State  of  Ohio,  and  which 
together  with  the  business  connections  of  the  company  and  the  repu- 
tation and  good  will  earned  by  more  than  fifty  years  of  public  ser- 
vice entered  largely  into  the  value  of  its  capital  shares.  Therefore 
the  company  claimed  that  the  scheme  of  taxation  was  unfair,  illegal, 
and  a  regulation  of  and  a  tax  upon  interstate  commerce  in  contra- 
vention of  the  Constitution  of  the  United  States.  The  case,  together 
with  several  others  involving  the  same  questions,  came  to  the  Su- 
preme Court  upon  appeal  from  the  Circuit  Court  of  the  United 
States  for  the  Sixth  District,  where  the  statute  had  been  upheld  as 
constitutional. 

MR.  CHIEF  JUSTICE  FULLER  delivered  the  opinion  of  the  court : 

The  principal  contention  is  that  the  rule  contravenes  the  com- 
merce clause  because  the  assessments,  while  purporting  to  be  on  the 
property  of  complainants  within  the  state,  are  in  fact  levied  on  their 
business,  which  is  largely  interstate  commerce.  Although  the  trans- 
portation of  the  subjects  of  interstate  commerce,  or  the  receipts  re- 
ceived therefrom,  or  the  occupation  or  business  of  carrying  it  on, 
cannot  be  directly  subjected  to  state  taxation,  yet  property  belonging 
to  corporations  or  companies  engaged  in  such  commerce  may  be; 
and  whatever  the  particular  form  of  the  exaction,  if  it  is  essentially 
only  property  taxation,  it  will  not  be  considered  as  falling  within 
the  inhibition  of  the  Constitution.  Corporations  and  companies  en- 
gaged in  interstate  commerce  should  bear  their  proper  proportion 
of  the  burdens  of  the  governments  under  whose  protection  they  con- 
duct their  operations,  and  taxation  on  property,  collectible  by  the 
ordinary  means,  does  not  affect  interstate  commerce  otherwise  than 
incidentally  as  all  business  is  affected  by  the  necessity  of  contribut- 
ing to  the  support  of  government.  Postal  Teleg.  Cable  Co.  v.. 
Adams,  155  U.  S.  688.  As  to  railroad,  telegraph,  and  sleeping-car 
companies,  engaged  in  interstate  commerce,  it  has  often  been  held 
by  this  court  that  their  property  in  the  several  states  through  which 
their  lines  or  business  extended  might  be  valued  as  a  unit  for  the 
purposes  of  taxation,  taking  into  consideration  the  uses  to  which  it 
was  put  and  all  the  elements  making  up  aggregate  value,  and  that  a 
proportion  of  the  whole  fairly  and  properly  ascertained  might  be 
taxed  by  the  particular  state,  without  violating  any  Federal  restric- 
tion. Pullman's  Palace  Car  Co.  v.  Pennsylvania,  141  U.  S.  18 
*  *  *  *  And  it  has  been  decided  that  a  proper  mode  of  ascer- 
taining the  assessable  value  of  so  much  of  the  whole  property  as  is 
situated  in  a  particular  state  is,  in  the  case  of  railroads,  to  take  that 
part  of  the  value  of  the  entire  road  which  is  measured  by  the  pro- 
portion of  its  length  therein  to  the  length  of  the  whole ;  or.  taking 
as  the  basis  of  assessment  such  proportion  of  the  capital  stock  of  the 
sleeping-car  company  as  the  number  of  miles  of  railroad  over  which 
its  cars  are  run  in  a  particular  state  bears  to  the  whole  number  of 
miles  traversed  by  them  in  that  and  other  states ;  or  such  a  propor- 
tion of  the  whole  value  of  the  capital  stock  of  a  telegraph  company 
as  the  length  of  its  lines  within  a  state  bears  to  the  length  of  all  its 


1 84  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

lines  everywhere,  deducting  a  sum  equal  to  the  value  of  its  real 
estate  and  machinery  subject  to  local  taxation  within  the  state. 
Doubtless  there  is  a  distinction  between  the  property  of  railroad  and 
telegraph  companies  and  that  of  express  companies.  The  physical 
unity  existing  in  the  former  is  lacking  in  the  latter ;  but  there  is  the 
same  unity  in  the  use  of  the  entire  property  for  the  specific  pur- 
pose, and  there  are  the  same  elements  of  value  arising  from  such  use. 
The  cars  of  the  Pullman  Company  did  not  constitute  a  physical 
unity,  and  their  value  as  separate  cars  did  not  bear  a  direct  relation 
to  the  valuation  which  was  sustained  in  that  case.  The  cars  were 
moved  by  railway  carriers  under  contract,  and  the  taxation  of  the 
corporation  in  Pennsylvania  was  sustained  on  the  theory  that  the 
whole  property  of  the  company  might  be  regarded  as  a  unit  plant, 
with  a  unit  value,  a  proportionate  part  of  which  value  might  be 
reached  by  the  state  authorities  on  the  basis  indicated.  No  more 
reason  is  perceived  for  limiting  the  valuation  of  the  property  of  ex- 
press companies  to  horses,  wagons,  and  furniture,  than  that  of  rail- 
road, telegraph,  and  sleeping-car  companies,  to  roadbed,  rails,  ajid 
ties,  poles  and  wires,  or  cars.  The  unit  is  a  unit  of  use  and  manage- 
ment, and  the  horses,  wagons,  safes,  pouches,  and  furniture,  the  con- 
tracts for  transportation  facilities,  the  capital  necessary  to  carry  on 
the  business — whether  represented  in  tangible  or  intangible  prop- 
erty— in  Ohio,  possessed  a  value  in  combination  and  from  uses  in 
connection  with  the  property  and  capital  elsewhere,  which  could  as 
rightfully  be  recognized  in  the  assessment  for  taxation  in  the  in- 
stance of  these  companies  as  the  others.  We  repeat  that  while  the 
unity  which  exists  may  not  be  a  physical  unity,  it  is  something 
more  than  a  mere  unity  of  ownership.  It  is  a  unity  of  use,  not 
simply  for  the  convenience  or  pecuniary  profit  of  the  owner,  but 
existing  in  the  very  necessities  of  the  case — resulting  from  the  very 
nature  of  the  business.  *  *  *  *  But  the  property  of  an  ex- 
press company  distributed  through  different  states  is  as  an  essential 
condition  of  the  business  united  in  a  single  specific  use.  It  consti- 
tutes but  a  single  plant,  made  so  by  the  very  character  and  necessi- 
ties of  the  business.  *  *  *  *  There  is  here  no  attempt  to  tax 
property  having  a  situs  outside  of  the  state,  but  only  to  place  a  just 
value  on  that  within.  Presumptively  all  the  property  of  the  corpora- 
tion or  company  is  held  and  used  for  the  purposes  of  its  business, 
and  the  value  of  its  capital  stock  and  bonds  is  the  value  of  only  that 
property  so  held  and  used.  *  *  *  *  The  states  through  which  the 
companies  operate  ought  not  to  be  compelled  to  content  themselves 
with  a  valuation  of  separate  pieces  of  property  disconnected  from 
the  plant  as  an  entirety,  to  the  proportionate  part  of  which  they  ex- 
tend protection,  and  to  the  dividends  of  whose  owners  their  citizens 
contribute.  *  *  *  *  Considering  as  we  do,  that  the  unit  rule 
may  be  applied  to  express  companies  without  disregarding  any  other 
Federal  restriction,  we  think  it  necessarily  follows  that  this  law  is 
not  open  to  the  objection  of  denying  the  equal  protection  of  the  laws. 
*  *  *  *  Decrees  affirmed. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  185 

UNITED  STATES  EXPRESS  COMPANY  v.  MINNESOTA. 
223  U.  S.  335.     1912. 

United  States  Express  Company  was  an  unincorporated  associa- 
tion, with  its  principal  office  in  New  York,  and  carried  on  an  express 
business  in  the  State  of  Minnesota,  having  about  fifty  offices  in 
that  State.  A  Minnesota  law  provides  for  the  payment  by  express 
companies  of  a  tax  of  6%  upon  their  gross  receipts  for  business 
done  in  the  State  for  each  calendar  year  as  determined  by  the 
Auditor,  "which  shall  be  in  lieu  of  all  taxes  on  its  property." 

The  Express  Company  contended  that  the  assessment  of  the  tax 
upon  its  earnings  from  shipments  by  a  consignor  in  the  State  of 
Minnesota  to  an  ultimate  consignee  within  the  State,  which  ship- 
ments were  forwarded  by  express  between  the  points  of  origin  and 
destination,  over  railroads  partly  within  and  partly  without  the 
State  of  Minnesota,  was  an  unconstitutional  exaction  in  that  it 
was  an  attempt  of  the  State  to  regulate  interstate  commerce,  and 
was  without  due  process  of  law.  As  to  such  shipments,  the  State 
Court  held  that  9  per  cent,  of  the  taxes  claimed  on  this  class  of 
earnings  should  be  deducted  from  the  amount  of  the  recovery  al- 
lowed in  the  court  of  original  jurisdiction,  since  it  was  disclosed 
that  only  91  per  cent,  of  the  mileage  was  within  the  State.  For 
this  part  of  the  decision  the  Minnesota  court  relied  upon  Lehigh 
Valley  R.  R.  Co.  v.  Pennsylvania,  145  U.  S.  192.  The  Supreme  Court 
sustained  this  part  of  the  State  court's  decision,  saying:  "An  ex- 
amination of  that  case  shows  that  it  is  decisive  of  the  present  one 
on  this  point,  and  we  need  not  further  discuss  this  feature  of  the 
case." 

As  to  the  transportation  from  points  within  the  State  to  points 
without  the  State,  from  points  without  the  State  to  points  within 
the  State,  and  from  points  without  the  State  to  points  without  the 
State,  passing  through  the  State,  the  transportation  outside  of  the 
State  being  performed  by  connecting  companies,  the  Supreme  Court 
of  Minnesota  held  that  it  was  the  intention  of  the  legislature,  in 
the  statute  under  consideration,  to  include  the  earnings  from  these 
classes  within  the  State  in  the  gross  receipts  upon  which  the  tax 
is  based. 

The  transportation  was  made  upon  a  through  rate  and  through 
bill  of  lading,  and,  it  is  stipulated,  consisted  of  a  single  transporta- 
tion transaction,  commencing  with  the  delivery  by  the  shipper  to 
the  express  company,  and  continuing  until  the  delivery  of  the  ship- 
ment to  the  consignee  at  the  ultimate  destination.  The  Federal 
question  raised  in  this  connection  is :  Is  this  tax  a  burden  upon 
interstate  commerce,  and  therefore  an  infraction  of  the  exclusive 
power  of  Congress,  under  the  Constitution,  to  regulate  commerce 
among  the  States  ? 

MR.  JUSTICE  DAY  delivered  the  opinion  of  the  court : 

The  Supreme  Court  of  Minnesota  construed  the  tax  to  be  a  prop- 


1 86  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

erty  tax,  measured  by  the  gross  earnings  within  the  State,  which, 
under  their  construction  of  the  tax,  included  the  earnings  here  in 
question.  That  court  held  that  the  statute  was  part  of  a  system 
long  in  force  in  Minnesota,  passed  under  the  authority  of  the  State 
Constitution,  and  was  intended  to  afford  a  means  of  valuing  the 
property  of  express  companies  within  the  State.  While  the  de- 
termination that  the  tax  is  a  property  tax  measured  by  gross  receipts 
is  not  binding  upon  this  court,  we  are  not  prepared  to  say  that  this 
conclusion  is  not  well  founded,  in  view  of  the  provisions  and  pur- 
poses of  the  law. 

The  statute  itself  provides  that  the  assessments  under  it  "shall 
be  in  lieu  of  all  taxes  upon  its  property."  In  other  words,  this  is 
the  only  mode  prescribed  in  Minnesota  for  exercising  the  recognized 
authority  of  the  State  to  tax  the  property  of  express  companies  as 
going  concerns  within  its  jurisdiction.  If  not  taxed  by  this  method, 
the  property  is  not  taxed  at  all.  In  this  connection,  the  language 
of  Mr.  Justice  Peckham  in  McHenry  v,  Alford,  168  U.  S.  65,  while 
it  was  not  necessary  to  the  decision  of  the  case,  is  nevertheless 
opposite : 

"When  it  is  said,  as  it  is  in  this  act,  that  the  tax  collected  by 
this  method  shall  be  in  lieu  of  all  other  taxes  whatever,  it  would 
seem  that  it  might  be  claimed  with  great  plausibility  that  a  tax 
levied  under  such  circumstances  and  by  such  methods  was  not  in 
reality  a  tax  upon  the  gross  earnings,  but  was  a  tax  upon  the  lands 
and  other  property  of  the  company,  and  that  the  method  adopted  of 
arriving  at  the  sum  which  the  company  should  pay  as  taxes  upon 
its  property  was  by  taking  a  percentage  of  its  gross  earnings." 

The  tax  in  the  present  case  is  not  like  those  held  invalid  in  the  Gal- 
veston  Case  and  the  Oklahoma  Case,  being  in  addition  to  other  state 
taxation  reaching  the  property  of  all  kinds  of  the  express  company. 
The  tax  to  be  collected  in  part  from  the  earnings  of  interstate  com- 
merce was  part  of  a  scheme  of  taxation  seeking  to  reach  the  value 
of  the  property  of  such  companies  in  the  state,  measured  by  the  re- 
ceipts from  business  done  within  the  state.  The  statute  was  not 
aimed  exclusively  at  the  avails  of  interstate  commerce  (Philadelphia 
&  S.  Mail  S.  S.  Co.  v.  Pennsylvania),  but,  as  in  the  Maine  Case, 
was  an  attempt  to  measure  the  amount  of  tax  within  the  ad- 
mitted power  of  the  state  by  income  derived,  in  part,  from  the  con- 
duct of  interstate  commerce.  The  property  of  express  companies, 
being  much  of  it  of  an  intangible  character,  is  difficult  to  reach  and 
properly  assess  for  taxation.  This  difficulty  led  this  court  in  Adams 
Exp.  Co.  v,  Ohio  State  Auditor,  165  U.  S.  194,  to  sustain  a  tax  upon 
the  property  of  an  express  company,  which  property  was  considered 
a  part  of  one  money-earning  organization  extending  through  many 
states. 

As  this  court  said  in  Postal  Teleg.  Cable  Co.  v.  Adams,  155  U.  S. 
688. 

"Doubtless  no  state  could  add  to  the  taxation  of  property  accord- 
ing to  the  rule  of  ordinary  property  taxation,  the  burden  of  a  license 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  187 

or  other  tax  on  the  privilege  of  using,  constructing,  or  operating  an 
instrumentality  of  interstate  or  international  commerce,  or  for  the 
carrying  on  of  such  commerce;  but  the  value  of  property  results 
from  the  use  to  which  it  is  put,  and  varies  with  the  profitableness  of 
that  use;  and  by  whatever  name  the  exaction  may  be  called,  if  it 
amounts  to  no  more  than  the  ordinary  tax  upon  property,  or  a  just 
equivalent  therefor,  ascertained  by  reference  thereto,  it  is  not  open  to 
attack  as  inconsistent  with  the  Constitution." 

We  think  the  tax  here  in  question  comes  within  this  principle. 
There  is  no  suggestion  in  the  present  record,  as  was  shown  in  Fargo 
v.  Hart,  193,  U.  S.  490,  that  the  amount  of  the  tax  is  unduly  great, 
having  reference  to  the  real  value  of  the  property  of  the  company 
within  the  state  and  the  assessment  made.  The  statute  embraces  re- 
ceipts from  all  the  business  done  within  the  state,  including  much 
which  is  purely  local. 

Upon  the  whole,  we  think  the  statute  falls  within  that  class  where 
there  has  been  an  exercise  in  good  faith  of  a  legitimate  taxing  power, 
the  measure  of  which  taxation  is  in  part  the  proceeds  of  interstate 
commerce,  which  could  not,  in  itself,  be  taxed,  and  does  not  fall 
within  that  class  of  statutes  uniformly  condemned  in  this  court, 
which  show  a  manifest  attempt  to  burden  the  conduct  of  interstate 
commerce,  such  power,  of  course,  being  beyond  the  authority  of  the 
state. 

We  find  no  error  in  the  judgment  of  the  Supreme  Court  of  the 
State  of  Minnesota,  and  it  is  affirmed. 


PEMBINA  CONSOLIDATED  SILVER  MINING,  ETC.,  COM- 
PANY v.  COMMONWEALTH  OF  PENNSYLVANIA. 

125  U.  S.  181.    1888. 

The  Pembina  Consolidated  Silver  Mining  and  Milling  Company 
was  incorporated  under  the  laws  of  Colorado  for  the  purpose  of  car- 
rying on  a  general  mining  and  milling  business  in  that  state.  Its  prin- 
cipal office  was  in  Alpine,  Colorado,  but  it  established  an  office  in  the 
City  of  Philadelphia,  Pennsylvania,  for  the  use  of  its  officers,  stock- 
holders, agents  and  employes.  The  State  of  Pennsylvania  assessed 
a  tax  against  the  corporation  "at  the  rate  of  one-fourth  of  a  mill  on 
each  dollar  of  its  capital  stock.  The  company  refused  to  pay  the 
tax  upon  the  ground  that  the  statute  under  which  it  was  levied 
amounted  to  a  regulation  of  interstate  commerce. 

The  Supreme  Court  of  Pennsylvania  decided  in  favor  of  the  con- 
stitutionality of  the  Statute.  The  case  was  then  appealed  to  the  Su- 
preme Court  of  the  United  States. 

MR.  JUSTICE  FIELD  delivered  the  opinion  of  the  court : 

The  exaction  of  a  license  fee  to  enable  the  corporation  to  have 


i88  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

an  office  for  that  purpose  within  the  Commonwealth  is  clearly  with- 
in the  competency  of  its  Legislature.  It  was  decided  long  ago, 
and  the  doctrine  has  been  often  affirmed  since,  that  a  corporation 
created  by  one  State  cannot,  with  some  exceptions,  to  which  we 
shall  presently  refer,  do  business  in  another  State  without  the  latter's 
consent,  express  or  implied.  In  Paul  v.  Virginia,  75  U.  S.  168, 
this  court,  speaking  of  a  foreign  corporation  (and  under  that  defini- 
tion the  plaintiff  in  error,  being  created  under  the  laws  of  Colorado, 
is  to  be  regarded),  said:  "The  recognition  of  its  existence  even 
by  other  States,  and  the  enforcement  of  its  contracts  made  therein, 
depend  purely  upon  the  comity  of  those  States,  a  comity  which  is 
never  extended  where  the  existence  of  the  corporation,  or  the  exer- 
cise of  its  powers  are  prejudicial  to  their  interests,  or  repugnant 
to  their  policy.  Having  no  absolute  right  of  recognition  in  other 
States,  but  depending  for  such  recognition  and  the  enforcement 
of  its  contracts  upon  their  consent,  it  follows  as  a  matter  of  course 
that  such  consent  may  be  granted  upon  such  terms  and  conditions 
as  those  States  may  think  proper  to  impose.  They  may  exclude 
the  foreign  corporation  entirely;  they  may  restrict  its  business  to 
particular  localities ;  or  they  may  exact  such  security  for  the  per- 
formance of  its  contracts  with  their  citizens  as  in  their  judgment 
will  best  promote  the  public  interests.  The  whole  matter  rests  in 
their  discretion."  A  qualification  of  this  doctrine  was  expressed 
in  Pensacola  Telegraph  Company  v.  Western  Union  Telegraph 
Company,  96  U.  S.  12,  so  far  as  it  applies  to  corporations  engaged 
in  commerce  under  the  authority  or  with  the  permission  of  Congress. 
*  *  *  *  The  Legislature  of  Florida  had  granted  to  another 
company,  for  twenty  years,  the  exclusive  right  to  establish  and 
maintain  telegraph  lines  in  certain  counties  of  the  State;  but  this 
exclusive  grant  was  adjudged  to  be  invalid  as  against  the  company 
acting  under  the  law  of  Congress.  And  undoubtedly  a  corporation 
of  one  State,  employed  in  business  of  the  General  Government, 
may  do  such  business  in  other  States  without  obtaining  a  license 
from  them.  Thus,  to  take  an  illustration  from  the  opinion  of  Mr. 
Justice  Bradley  in  a  case  recently  decided  by  him,  "If  Congress 
should  employ  a  corporation  of  ship  builders  to  construct  a  man-of- 
war,  they  would  have  the  right  to  purchase  the  necessary  timber 
and  iron  in  any  State  of  the  Union,"  and,  we  may  add,  without 
the  permission  and  against  the  prohibition  of  the  State.  Stockton  v. 
Baltimore  &  N.  Y.  R.  Co.,  32  Fed.  Rep.  9.  These  exceptions  do 
not  touch  the  general  doctrine  declared  as  to  corporations  not  car- 
rying on  foreign  or  interstate  commerce,  or  not  employed  by  the 
Government.  As  to  these  corporations,  the  doctrine  of  Paul  v. 
Virginia  applies.  The  Colorado  corporation  does  not  come  within 
any  of  the  exceptions.  Therefore,  the  recognition  of  its  existence 
in  Pennsylvania,  even  to  the  limited  extent  of  allowing  it  to  have 
an  office  within  its  limits  for  the  use  of  its  officers,  stockholders, 
agents,  and  employes,  was  a  matter  dependent  on  the  will  of  the 
State.  It  could  make  the  grant  of  the  privilege  conditional  upon 
the  payment  of  a  license  tax,  and  fix  the  sum  according  to  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  189 

amount  of  the  authorized  capital  of  the  corporation.  The  absolute 
power  of  exclusion  includes  the  right  to  allow  a  conditional  and 
restricted  exercise  of  its  corporate  powers  within  the  State. 
*  *  *  *  The  only  limitation  upon  this  power  of  the  State  to 
exclude  a  foreign  corporation  from  doing  business  within  its  limits, 
or  hiring  offices  for  that  purpose,  or  to  exact  conditions  for  allowing 
the  corporation  to  do  business  or  hire  offices  there,  arises  where  the 
corporation  is  in  the  employ  of  the  Federal  Government,  or  where 
its  business  is  strictly  commerce,  interstate  or  foreign.  The  control 
of  such  commerce,  being  in  the  Federal  Government,  is  not  to  be 
restricted  by  State  authority.  Judgment  affirmed. 


Note.— Western  Union  Telegraph  Co.  v.  Kansas,  216  U.  S.  1  (1910). 
A  statute  passed  by  the  State  of  Kansas  in  1898  provided  that 
foreign  corporations  desiring  to  do  business  in  the  State  should  make  appli- 
cation to  the  State  Charter  Board,  accompanying  their  applications  with  a 
fee  of  $25,  and  if  the  Board  granted  the  application  they  should  pay  for 
the  benefit  of  the  school  fund  a  charter  fee  of  1-10  of  1  per  cent,  of  their 
authorized  capital  stock  upon  the  first  $100,000  of  their  capital,  1-20  of  1 
per  cent,  upon  the  next  $400,000,  and  for  each  $1,000,000  or  major  part 
thereof  above  the  sum  of  $500,000,  $200.  The  payment  of  this  fee  was  made 
a  condition  precedent  to  the  doing  of  business  in  the  State.  The  Western 
Union  Telegraph  Company  made  application,  stating  that  its  authorized 
capital  stock  was  $100,000,000,  whereupon  the  Board  granted  it  permission 
to  do  business  provided  it  paid  a  charter  fee  of  $20,100.  The  company 
refused  to  pay  the  tax  on  the  ground  that  it  violated  the  commerce  and 
due  process  of  law  clauses  of  the  United  States  Constitution.  The  Supreme 
Court  held  that  the  State  law  was  unconstitutional  and  void.  In  making 
this  decision  the  Court  used  the  following  language : 

"It  is  clear  that  the  making  of  the  payment  by  the  telegraph  company,  as 
a  charter  fee,  of  a  given  per  cent,  of  its  authorised  capital,  representing,  as 
that  capital  clearly  does,  all  of  its  business  and  property,  both  within  and 
outside  of  the  State,  a  condition  of  its  right  to  do  local  business  in  Kansas, 
is,  in  its  essence,  not  simply  a  tax  for  the  privilege  of  doing  local  business 
in  the  State,  but  a  burden  and  tax  on  the  company's  interstate  business  and 
on  its  property  located  or  used  outside  of  the  State.  *  *  *  *  That  fee, 
plainly,  is  not  based  on  such  of  the  company's  capital  stock  as  represented 
in  its  local  business  and  property  in  Kansas.  The  requirement  is  a  given 
per  cent,  of  the  company's  authorized  capital ;  that  is,  all  its  capital,  wherever 
or  however  employed,  whether  in  the  United  States  or  in  foreign  countries, 
and  whatever  may  be  the  extent  of  its  lines  in  Kansas  as  compared  with  its 
lines  outside  of  that  State.  What  part  of  the  fee  exacted  is  to  be  attributed 
to  the  company's  domestic  business  in  Kansas  and  what  part  to  interstate 
business,  the  State  has  not  chosen  to  ascertain  and  declare  in  the  statute. 
It  strikes  at  the  company's  entire  business,  wherever  conducted,  and  its  prop- 
erty, wherever  located,  and,  in  terms,  makes  it  a  condition  of  the  company's 
telegraph  right  to  transact  purely  local  business  in  Kansas  that  it  shall  con- 
tribute, for  the  benefit  of  the  State  school  fund,  a  given  per  cent,  of  its 
whole  authorized  capital,  representing  all  of  its  property  and  all  its  business 
and  interests  everywhere.  *  *  *  *  It  is  easy  to  be  seen  that  if  every 
State  should  pass  a  statute  similar  to  that  enacted  by  Kansas,  not  only  the 


190  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

freedom  of  interstate  commerce  would  be  destroyed,  the  decisions  of  this 
court  nullified,  and  the  business  of  the  country  thrown  into  confusion,  but 
each  State  would  continue  to  meet  its  own  local  expenses  not  only  by  ex- 
actions that  directly  burdened  such  commerce,  but  by  taxation  upon  property 
situated  beyond  its  limits." 


S.  S.  WHITE  DENTAL  MANUFACTURING  COMPANY  v. 
COMMONWEALTH  OF  MASSACHUSETTS. 

BALTIC   MINING   COMPANY   v.    COMMONWEALTH    OF 
MASSACHUSETTS. 

231  U.  S.  68.     Decided  November  3rd,  1913. 

The  S.  S.  White  Dental  Manufacturing  Company  is  a  Pennsyl- 
vania corporation  engaged  in  manufacturing  and  selling  artificial 
teeth  and  dental  supplies  with  an  authorized  capital  stock  of 
$1,000,000,  and  with  its  principal  office  in  Philadelphia.  Its  assets 
aggregate  $5,711,718.29.  It  has  a  usual  place  of  business  in  Boston, 
where  it  keeps  a  supply  of  goods  displayed  for  sale  and  in  stock. 
The  stock  on  hand  in  the  Boston  store,  the  fixtures  and  the  current 
bank  deposits,  represented  the  tangible  property  in  Massachusetts, 
and  amounted  to  about  $100,000.  The  State  of  Massachusetts  im- 
posed a  tax  upon  the  corporation  in  accordance  with  the  following 
section  of  its  law  (Mass.  Pub.  Stat.,  1909,  Chap.  490,  Section  56)  : 
"Every  foreign  corporation  shall  in  every  year  at  the  time  of  filing 
its  annual  certificate  of  condition,  pay  to  the  treasurer  and  receiver 
general,  for  the  use  of  the  Commonwealth,  an  excise  tax,  to  be 
assessed  by  the  tax  commissioner,  of  1-50  of  1  per  cent,  of  the  par 
value  of  its  authorized  capital  stock  as  stated  in  its  annual  certifi- 
cate of  condition ;  but  the  amount  of  such  excise  tax  shall  not  in 
any  one  year  exceed  the  sum  of  $2,000."  The  company  paid  the 
tax  for  a  number  of  years,  and  then  brought  suit  to  recover  back 
the  amount  it  had  so  paid,  upon  the  ground  that  the  tax  was  a 
regulation  of  interstate  commerce. 

The  Baltic  Mining  Company,  a  Michigan  corporation,  owning  a 
copper  mine  with  equipment  in  Michigan,  and  having  an  office  in 
the  city  of  Boston  for  the  use  of  its  President  and  Treasurer, 
having  a  total  authorized  capital  stock  of  $2,500,000,  with  none  of 
its  property  in  the  State  of  Massachusetts,  except  current  bank 
deposits,  brought  an  action  of  the  same  character,  and  the  two 
cases  involving  the  same  questions  were  decided  in  the  one  opinion 
of  the  court. 

MR.  JUSTICE  DAY  delivered  the  opinion  of  the  court : 

The  mere  fact  that  a  corporation  is  engaged  in  interstate  com- 
merce does  not  exempt  its  property  from  State  taxation.  United 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  191 

States  Exp.  Co.  v.  Minnesota,  223  U.  S.  335.  It  is  the  commerce 
itself  which  must  not  be  burdened  by  State  exactions  which  inter- 
fere with  the  exclusive  Federal  authority  over  it.  A  resort  to 
the  receipts  of  property  or  capital  employed  in  part,  at  least,  in 
interstate  commerce,  when  such  receipts  or  capital  are  not  taxed 
as  such,  but  are  taken  as  a  mere  measure  of  a  tax  of  lawful  author- 
ity within  the  State,  has  been  sustained.  *  *  *  *  It  is  said, 
that  this  tax  is  a  direct  burden  upon  interstate  commerce,  and  an 
attempt  to  tax  property  beyond  the  jurisdiction  of  the  State,  within 
the  authority  of  the  Kansas  cases,  Western  U.  Teleg.  Co.  v.  Kansas, 
216  U.  S.  1 ;  Pullman  Co.  v.  Kansas,  216  U.  S.  56.  *  *  *  * 
In  Western  U.  Teleg.  Co.  v.  Kansas,  and  Pullman  Co.  v.  Kansas, 
the  statute  under  which  the  State  of  Kansas  undertook  to  levy  a 
charter  fee  of  1-10  of  1  per  cent,  of  their  authorized  capital  upon 
the  first  $100,000  of  the  capital  stock  of  foreign  corporations,  and 
1-20  of  1  per  cent,  upon  the  next  $400,000,  and  for  each  million 
or  major  part  thereof,  $200,  making  a  tax  of  $20,100  against  the 
Western  Union  Telegraph  Company,  and  $14,800  against  the  Pull- 
man Company,  was  declared  to  be  unconstitutional,  as  having  the 
effect  not  simply  to  exert  the  lawful  power  of  taxing  a  foreign 
corporation  for  the  privilege  of  doing  local  business,  but  to  burden 
interstate  commerce,  and  to  reach  property  represented  by  the 
capital  stock  of  the  companies,  which  was  duly  paid  in  and  in- 
vested in  property  in  many  States,  and  therefore  beyond  the  taxing 
jurisdiction  of  Kansas.  Every  case  involving  the  validity  of  a  tax 
must  be  decided  upon  its  own  facts,  and  having  no  disposition  to 
limit  the  authority  of  these  cases,  the  facts  upon  which  they  were 
decided  must  not  be  lost  sight  of  in  deciding  other  and  alleged 
similar  cases.  In  the  Kansas  cases  the  business  of  both  complain- 
ing companies  was  commerce,  the  same  instrumentalities  and  the 
same  agencies  carrying  on  in  the  same  places  the  business  of  the 
companies  of  State  and  interstate  character.  In  the  Western  U. 
Teleg.  Co.  case,  the  company  had  a  large  amount  of  property  perma- 
nently located  within  the  State,  and  between  800  and  900  offices 
constantly  carrying  on  both  State  and  interstate  business.  The 
Pullman  Company  had  been  running  a  large  number  of  cars  within 
the  State,  in  State  and  interstate  business,  for  many  years.  There 
was  no  attempt  to  separate  the  intrastate  business  from  the  inter- 
state business  by  the  limitations  of  State  lines  in  its  prosecution. 
*  *  In  the  cases  at  bar  the  business  for  which  the  com- 
panies are  chartered  is  not,  of  itself,  commerce.  True  it  is,  that 
their  products  are  sold  and  shipped  in  interstate  commerce,  and  to 
that  extent  they  are  engaged  in  the  business  of  carrying  on  interstate 
commerce,  and  are  entitled  to  the  protection  of  the  Federal  Con- 
stitution against  laws  burdening  commerce  of  that  character.  Inter- 
state commerce  of  all  kinds  is  within  the  protection  of  the  Constitu- 
tion of  the  United  States,  and  it  is  not  within  the  authority  of  a 
State  to  tax  it  by  burdensome  laws.  From  the  statement  of  facts 
it  is  apparent,  however,  that  each  of  the  corporations  in  question 
is  carrying  on  a  purely  local  and  domestic  business,  quite  separate 


192  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

from  its  interstate  transactions.  That  local  and  domestic  business, 
for  the  privilege  of  doing  which  the  State  has  imposed  a  tax,  is 
real  and  substantial,  and  not  so  connected  with  the  interstate  com- 
merce as  to  render  a  tax  upon  it  a  burden  upon  the  interstate  busi- 
ness of  the  companies  involved.  In  these  cases  the  ultimate  con- 
tention is  not  that  the  receipts  from  interstate  commerce  are  taxed 
as  such,  but  that  the  property  of  the  corporations,  including  that 
used  in  such  commerce,  represented  by  the  authorized  capital  of  the 
corporations,  is  taxed,  and  therefore  interstate  commerce  is  unlaw- 
fully burdened  by  a  State  statute.  While  the  tax  is  imposed  by 
taking  a  percentage  of  the  authorized  capital,  the  agreed  facts  show 
that  the  authorized  capital  is  only  a  part  of  the  capital  of  the  corpor- 
ations, respectively.  In  the  Baltic  Mining  Company  case,  the  author- 
ized capital  is  $2,500,000,  while  the  entire  property  and  assets  are 
$10,766,000;  and  in  the  White  Dental  Company  case  the  authorized 
capital  is  $1,000,000,  while  the  assets  aggregate  $5,711,718.29. 
Further,  the  Massachusetts  statute  limits  the  tax  to  a  maximum  of 
$2,000.  The  conclusion,  therefore,  that  the  authorized  capital  is 
only  used  as  the  measure  of  a  tax,  in  itself  lawful,  without  the 
necessary  effect  of  burdening  interstate  commerce,  brings  the  legis- 
lation within  the  authority  of  the  State.  So,  if  the  tax  is,  as  we 
hold  it  to  be,  levied  upon  a  legitimate  subject  of  such  taxation,  it 
is  not  void  because  imposed  upon  property  beyond  the  State's  juris- 
diction, for  the  property  itself  is  not  taxed.  In  so  far  as  it  is 
represented  in  the  authorized  capital  stock,  it  is  used  only  as  a 
measure  of  taxation,  and,  as  we  have  seen,  such  measure  may  be 
found  in  property  or  in  the  receipts  from  property  not  in  them- 
selves taxable.  *  *  *  *  As  this  statute  has  been  construed 
by  the  Supreme  Judicial  Court  of  Massachusetts,  and  applied  in 
these  cases,  we  are  unable  to  find  that  the  tax  imposed  violates  the 
constitutional  rights  of  the  plaintiffs  in  error. 

Judgments  affirmed. 

Dissenting:     The  Chief  Justice,  Mr.  Justice  Van  Devanter  and 
Mr.  Justice  Pitney. 


2.     The  State  Police  Power  as  Affecting  Commerce. 

WILLSON  v.  BLACKBIRD  CREEK  MARSH  COMPANY. 
2   PETERS,  245.     1829. 

A  statute  of  the  State  of  Delaware  authorized  the  Blackbird 
Creek  Marsh  Company  to  erect  a  dam  on  Blackbird  Creek,  a  naviga- 
ble stream  wholly  within  the  State.  By  this  dam  property  along 
the  stream  was  improved,  but  it  blocked  the  river  and  stopped  nav- 
igation. Willson  and  others  owned  a  sloop,  regularly  enrolled  un- 
der an  act  of  Congress  and  licensed  to  carry  on  the  coasting  trade. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  193 

The  owners  of  the  sloop  destroyed  the  dam  in  getting  their  boat 
up  the  creek.  The  company  then  sued  them  for  trespass.  The 
owners  of  the  sloop  sought  to  justify  their  act  on  the  theory  that  the 
Blackbird  Creek  being  a  navigable  stream,  was  a  highway  of  in- 
terstate commerce,  and  therefore  the  State  statute  permitting  the 
company  to  dam  it  conflicted  with  the  act  of  Congress,  under  which 
they  were  licensed.  The  highest  court  of  the  State  gave  judgment 
in  favor  of  the  company,  whereupon  an  appeal  was  taken  to  the 
United  States  Supreme  Court. 

MR.  CHIEF  JUSTICE  MARSHALL  delivered  the  opinion  of  the  court. 

The  Act  of  Assembly  by  which  the  plaintiffs  were  authorized  to 
construct  their  dam,  shows  plainly  that  this  is  one  of  those  many 
creeks,  passing  through  a  deep  level  marsh  adjoining  the  Delaware, 
up  which  the  tide  flows  for  some  distance.  The  value  of  the  prop- 
erty on  its  banks  must  be  enhanced  by  excluding  the  water  from  the 
marsh,  and  the  health  of  the  inhabitants  probably  improved.  Meas- 
ures calculated  to  produce  these  objects,  provided  they  do  not  come 
into  collision  with  the  powers  of  the  general  government,  are  un- 
doubtedly within  those  which  are  reserved  to  the  States.  But  the 
measure  authorized  by  this  act  stops  a  navigable  creek,  and  must 
be  supposed  to  abridge  the  rights  of  those  who  have  been  accustomed 
to  use  it.  But  this  abridgement,  unless  it  comes  in  conflict  with 
the  Constitution  or  a  law  of  the  United  States,  is  an  affair  between 
the  government  of  Delaware  and  its  citizens,  of  which  this  court 
can  take  no  cognizance. 

The  counsel  for  the  plaintiffs  in  error  insist  that  it  comes  in  con- 
flict with  the  power  of  the  United  States  "to  regulate  commerce 
with  foreign  nations  and  among  the  several  States." 

If  Congress  had  passed  an  act  which  bore  upon  the  case — any 
act  in  execution  of  the  power  to  regulate  commerce,  the  object  of 
which  was  to  control  State  legislation  over  those  small  navigable 
creeks  into  which  the  tide  flows,  and  which  abound  throughout  the 
lower  country  of  the  middle  and  southern  States — we  should  feel 
not  much  difficulty  in  saying  that  a  State  law  coming  in  conflict 
with  such  an  act  would  be  void.  But  Congress  has  passed  no  such 
act.  The  repugnancy  of  the  law  of  Delaware  to  the  Constitution 
is  placed  entirely  on  its  repugnancy  to  the  power  to  regulate  com- 
merce with  foreign  nations  and  among  the  several  States ;  a  power 
which  has  not  been  so  exercised  as  to  affect  the  question. 

We  do  not  think  that  the  act  empowering  the  Blackbird  Creek 
Marsh  Company  to  place  a  dam  across  the  creek,  can,  under  all  the 
circumstances  of  the  case,  be  considered  as  repugnant  to  the  power 
to  regulate  commerce  in  its  dormant  state,  or  as  being  in  conflict 
with  any  law  passed  on  the  subject. 


194  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

COOLEY  v.  BOARD  OF  WARDENS  OF  THE  PORT  OF 
PHILADELPHIA. 

12  HOWARD,  299.     1851. 

These  cases  were  brought  to  the  United  States  Supreme  Court 
by  writs  of  error  to  the  Supreme  Court  of  Pennsylvania.  They 
were  actions  to  recover  half-pilotage  fees  collected  under  a  law  of 
the  State  of  Pennsylvania,  passed  March,  1803,  providing  that  a 
vessel  which  neglects  or  refuses  to  take  a  pilot  shall  forfeit  and 
pay  to  the  master  warden  of  the  pilots,  for  the  use  of  the  Society 
for  the  Relief  of  Distressed  Pilots,  one-half  the  regular  amount  of 
pilotage.  The  Supreme  Court  of  Pennsylvania  sustained  the  valid- 
ity of  the  fees.  One  of  the  grounds  of  error  assigned  was  that  the 
State  law  was  repugnant  to  the  commerce  clause  of  the  Constitution 
of  the  United  States.  (Art.  I,  Sec.  8,  Clause  3). 

MR.  JUSTICE  CURTIS  delivered  the  opinion  of  the  court. 

The  power  to  regulate  navigation  is  the  power  to  prescribe  rules 
in  conformity  with  which  navigation  must  be  carried  on.  It  ex- 
tends to  the  persons  who  conduct  it,  as  well  as  to  the  instruments 
used.  *  *  *  * 

It  becomes  necessary,  therefore,  to  consider  whether  this  law  of 
Pennsylvania,  being  a  regulation  of  commerce,  is  valid. 

The  act  of  Congress  of  the  7th  of  August,  1789,  §  4,  is  as  fol- 
lows : 

"That  all  pilots  in  the  bays,  inlets,  rivers,  harbors,  and  ports  of 
the  United  States  shall  continue  to  be  regulated  in  conformity  with 
the  existing  laws  of  the  States,  respectively,  wherein  such  pilots 
may  be,  or  with  such  laws  as  the  States  may  respectively  hereafter 
•enact  for  the  purpose,  until  further  legislative  provision  shall  be 
made  by  Congress."  *  *  *  * 

If  the  States  were  divested  of  the  power  to  legislate  on  this  sub- 
ject by  the  grant  of  the  commercial  power  to  Congress,  it  is  plain 
this  act  could  not  confer  upon  them  power  thus  to  legislate.  If 
the  Constitution  excluded  the  States  from  making  any  law  regulat- 
ing commerce,  certainly  Congress  cannot  regrant,  or  in  any  man- 
ner reconvey  to  the  States  that  power.  And  yet  this  act  of  1789 
gives  its  sanction  only  to  laws  enacted  by  the  States.  This  nec- 
essarily implies  a  constitutional  power  to  legislate ;  for  only  a  rule 
created  by  a  sovereign  power  of  a  State  acting  in  its  legislative 
capacity,  can  be  deemed  a  law,  enacted  by  a  State ;  and  if  the  State 
has  so  limited  its  sovereign  power  that  it  no  longer  extends  to  a 
particular  subject,  manifestly  it  cannot,  in  any  proper  sense,  be  said 
to  enact  laws  thereon.  Entertaining  these  views,  we  are  brought 
directly  and  unavoidably  to  the  consideration  of  the  question  whether 
the  grant  of  the  commercial  power  to  Congress  did  per  se  deprive 
the  States  of  all  power  to  regulate  pilots. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  195 

Either  absolutely  to  affirm  or  deny  that  the  nature  of  this  power 
requires  exclusive  legislation  by  Congress,  is  to  lose  sight  of  the 
nature  of  the  subjects  of  this  power,  and  to  assert  concerning  all  of 
them  what  is  really  applicable  but  to  a  part.  Whatever  subjects 
of  this  power  are  in  their  nature  national,  or  admit  only  of  one  uni- 
form system,  a  plan  of  regulation,  may  justly  be  said  to  be  of  such 
a  nature  as  to  require  exclusive  legislation  by  Congress.  That  this 
cannot  be  affirmed  of  laws  for  the  regulation  of  pilots  and  pilotage, 
is  plain.  The  act  of  1789  contains  a  clear  and  authoritative  declara- 
tion by  the  first  Congress,  that  the  nature  of  this  subject  is  such  that 
until  Congress  should  find  it  necessary  to  exert  its  power,  it  should 
be  left  to  the  legislation  of  the  States ;  that  it  is  local  and  not  na- 
tional ;  that  it  is  likely  to  be  the  best  provided  for,  not  by  one  sys- 
tem, or  plan  of  regulations,  but  by  as  many  as  the  legislative  dis- 
cretion of  the  several  States  should  deem  applicable  to  the  local 
peculiarities  of  the  ports  within  their  limits. 

Viewed  in  this  light,  so  much  of  this  act  of  1789  as  declares  that 
pilots  shall  continue  to  be  regulated  "by  such  laws  as  the  States 
may  respectively  hereafter  enact  for  that  purpose,"  instead  of  being 
held  to  be  inoperative,  as  an  attempt  to  confer  on  the  States  a  power 
to  legislate,  of  which  the  Constitution  had  deprived  them,  is  al- 
lowed an  appropriate  and  important  signification.  It  manifests  the 
understanding  of  Congress,  at  the  outset  of  the  government,  that 
the  nature  of  this  subject  is  not  such  as  to  require  its  exclusive  leg- 
islation. The  practice  of  the  States,  and  of  the  national  govern- 
ment, has  been  in  conformity  with  this  declaration,  from  the  origin 
of  the  national  government  to  this  time ;  and  the  nature  of  the  sub- 
ject, when  examined,  is  such  as  to  leave  no  doubt  of  the  superior 
fitness  and  propriety,  not  to  say  the  absolute  necessity,  of  different 
systems  of  regulation,  drawn  from  local  knowledge  and  experience, 
and  conformed  to  local  wants.  *  *  *  * 

It  is  the  opinion  of  a  majority  of  the  court  that  the  mere  grant 
to  Congress  of  the  power  to  regulate  commerce,  did  not  deprive  the 
States  of  Power  to  regulate  pilots,  and  that  although  Congress  has 
legislated  on  this  subject,  its  legislation  manifests  an  intention,  with 
a  single  exception,  not  to  regulate  this  subject,  but  to  leave  its  regu- 
lation to  the  several  States.  *  *  *  * 

If  the  grant  of  commercial  power  in  the  Constitution  has  deprived 
the  States  of  all  power  to  legislate  for  the  regulation  of  pilots,  if 
their  laws  on  this  subject  are  mere  usurpations  upon  the  exclusive 
power  of  the  general  government,  and  utterly  void,  it  may  be  doubted 
whether  Congress  could,  with  propriety,  recognize  them  as  laws, 
and  adopt  them  as  its  own  acts ;  and  how  are  the  legislatures  of  the 
States  to  proceed  in  future,  to  watch  over  and  amend  these  laws,  as 
the  progressive  wants  of  a  growing  commerce  will  require,  when 
the  members  of  those  legislatures  are  made  aware  that  they  cannot 
legislate  on  this  subject  without  violating  the  oaths  they  have  taken 
to  support  the  Constitution  of  the  United  States? 


196  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

* 

We  are  of  opinion  that  this  State  law  was  enacted  by  virtue  of  a 
power  residing  in  the  State  to  legislate;  that  it  is  not  in  conflict 
with  any  law  of  Congress ;  that  it  does  not  interfere  with  any  system 
which  Congress  has  established  by  making  regulations,  or  by  in- 
tentionally leaving  individuals  to  their  own  unrestricted  action ;  that 
this  law  is  therefore  valid,  and  the  judgment  of  the  Supreme  Court 
of  Pennsylvania  in  each  case  must  be  affirmed. 

M'LEAN,  J.,  and  WAYNE,  J.,  dissented ;  and  DANIEL,  J.,  although 
he  concurred  in  the  judgment  of  the  court,  yet  dissented  from  its 
reasoning. 


LEISY  v.  HARDIN. 
135  U.  S.,  100.     1890. 

Leisy  and  other  persons,  residents  of  Illinois,  shipped  a  certain 
quantity  of  beer  to  Iowa  to  be  sold  there  in  its  original  package. 
(122  one-quarter  barrels,  171  one-eighth  barrels  and  11  sealed  cases). 
The  beer  was  seized  by  Hardin,  Marshal,  of  the  city  of  Keokuk, 
Iowa,  under  an  Iowa  statute  which  forbade  the  sale  of  liquor  except 
for  medicinal  purposes.  This  action  was  brought  originally  in  the 
Superior  Court  of  Keokuk,  which  court  awarded  to  Leisy  the  re- 
turn of  the  property.  This  judgment  was  reversed  by  the  Supreme 
Court  of  Iowa,  whereupon  the  decision  was  brought  to  the  United 
States  Supreme  Court  for  review. 

MR.  CHIEF  JUSTICE  FULLER  delivered  the  opinion  of  the  court. 

The  power  vested  in  Congress  "to  regulate  commerce  with  for- 
eign nations,  and  among  the  several  States,  and  with  the  Indian 
tribes,"  is  the  power  to  prescribe  the  rule  by  which  the  commerce 
is  to  be  governed,  arid  is  a  power  complete  in  itself,  acknowledging 
no  limitations  other  than  those  prescribed  in  the  Constitution.  It 
is  co-extensive  with  the  subject  on  which  it  acts  and  cannot  be 
stopped  at  the  external  boundary  of  a  State,  but  must  enter  its 
interior  and  must  be  capable  of  authorizing  the  disposition  of  those 
articles  which  it  introduces,  so  that  they  may  become  mingled  with 
the  common  mass  of  property  within  the  territory  entered.  Gib- 
bons v.  Ogden,  9  Wheat.  1.  Brown  v.  Maryland,  12  Wheat.  419. 

And  while,  by  virtue  of  its  jurisdiction  over  persons  and  property 
within  its  limits,  a  State  may  provide  for  the  security  of  the  lives, 
limbs,  health  and  comfort  of  persons  and  the  protection  of  property 
so  situated,  yet  a  subject  matter  which  has  been  confided  exclusively 
to  Congress  by  the  Constitution  is  not  within  the  jurisdiction  of  the 
police  power  of  the  State,  unless  placed  there  by  congressional  ac- 
tion. Henderson  v.  Mayor  of  New  York,  92  U.  S.,  259.  The  power 
to  regulate  commerce  among  the  States  is  a  unit,  but  if  particular 
subjects  within  its  operation  do  not  require  the  application  of  a 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  197 

general  or  uniform  system,  the  States  may  legislate  in  regard  to 
them  with  a  view  to  local  needs  and  circumstances,  until  Congress 
otherwise  directs;  but  the  power  thus  exercised  by  the  States  is 
not  identical  in  its  extent  with  the  power  to  regulate  commerce 
among  the  States.  The  power  to  pass  laws  in  respect  to  internal 
commerce,  inspection  laws,  quarantine  laws,  health  laws  and  laws 
in  relation  to  bridges,  ferries  and  highways,  belongs  to  a  class 
of  powers  pertaining  to  locality,  essential  to  local  intercommuni- 
cation, to  the  progress  and  development  of  local  prosperity  and  to 
the  protection,  the  safety  and  the  welfare  of  society,  originally  nec- 
essarily belonging  to,  and  upon  the  adoption  of  the  Constitution  re- 
served by,  the  States,  except  so  far  as  falling  within  the  scope  of 
a  power  confided  to  the  general  government.  Where  the  subject 
matter  requires  a  uniform  system  as  between  the  States,  the  power 
controlling  it  is  vested  exclusively  in  Congress,  and  cannot  be  en- 
croached upon  by  the  States ;  but  where,  in  relation  to  the  sub- 
ject matter,  different  rules  may  be  suitable  for  different  localities, 
the  States  may  exercise  powers  which,  though  they  may  be  said  to 
partake  of  the  nature  of  the  power  granted  to  the  general  govern- 
ment, are  strictly  not  such,  but  are  simply  local  powers,  which  have 
full  operation  until  or  unless  circumscribed  by  the  action  of  Con- 
gress in  effectuation  of  the  general  power.  Cooley  v.  Port  War- 
dens, 12  How.  299.  *  *  *  * 

Whenever,  however,  a  particular  power  of  the  general  govern- 
ment is  one  which  must  necessarily  be  exercised  by  it,  and  Congress 
remains  silent,  this  is  not  only  not  a  concession  that  the  powers  re- 
served by  the  States  may  be  exerted  as  if  the  specific  power  had  not 
been  elsewhere  reposed,  but,  on  the  contrary,  the  only  legitimate 
conclusion  is  that  the  general  government  intended  that  power 
should  not  be  affirmatively  exercised,  and  the  action  of  the  States 
cannot  be  permitted  to  effect  that  which  would  be  incompatible  with 
such  intention.  Hence,  inasmuch  as  interstate  commerce,  consist- 
ing in  the  transportation,  purchase,  sale  and  exchange  of  commodi- 
ties, is  national  in  its  character,  and  must  be  governed  by  a  uni- 
form system,  so  long  as  Congress  does  not  pass  any  law  to  regu- 
late it,  or  allowing  the  States  so  to  do,  it  thereby  indicates  its  will 
that  such  commerce  shall  be  free  and  untrammelled. 

That  ardent  spirits,  distilled  liquors,  ale  and  beer  are  subjects  of 
exchange,  barter  and  traffic,  like  any  other  commodity  in  which  a 
right  of  traffic  exists,  and  are  so  recognized  by  the  usages  of  the 
commercial  world,  the  laws  of  Congress,  and  the  decisions  of  courts, 
is  not  denied.  Being  thus  articles  of  commerce,  can  a  State,  in  the 
absence  of  legislation  on  the  part  of  Congress,  prohibit  their  im- 
portation from  abroad  or  from  a  sister  State,  or  when  imported 
prohibit  their  sale  by  the  importer?  If  the  importation  cannot  be 
prohibited  without  the  consent  of  Congress,  when  does  property 
imported  from  abroad,  or  from  a  sister  State,  so  become  part  of 
the  common  mass  of  property  within  a  State  as  to  be  subject  to  its 
unimpeded  control?  *  *  *  * 


198  SELECTED  CASES  IN  CONSTITUTIONAL  LAW.* 

The  doctrine  now  firmly  established  is,  as  stated  by  Mr.  Justice 
Field,  in  Bo\wman  v.  Chicago,  &c.,  Railway  Co.,  125  U.  S.,  507,  "that 
where  the  subject  upon  which  Congress  can  act  under  its  commer 
cial  power  is  local  in  its  nature  or  sphere  of  operation,  such  as  har- 
bor pilotage,  the  improvement  of  harbors,  the  establishment  of  bea- 
cons and  buoys  to  guide  vessels  in  and  out  of  port,  the  construction 
of  bridges,  over  navigable  rivers,  the  erection  of  wharves,  piers  and 
docks,  and  the  like,  which  can  be  properly  regulated  only  by  special 
provisions  adapted  to  their  localities,  the  State  can  act  until  Con- 
gress interferes  and  supersedes  its  authority;  but  where  the  subject 
is  national  in  its  character,  and  admits  and  requires  uniformity  of 
regulation,  affecting  alike  all  the  States,  such  as  transportation  be- 
tween the  States,  including  the  importation  of  goods  from  one 
State  into  another,  Congress  can  alone  act  upon  it  and  provide  the 
needed  regulations.  The  absence  of  any  law  of  Congress  on  the 
subject  is  equivalent  to  its  declaration  that  commerce  in  that  matter 
shall  be  free.  Thus  the  absence  of  regulations  as  to  interstate  com- 
merce with  reference  to  any  particular  subject  is  taken  as  a  declara- 
tion that  the  importation  of  that  article  into  the  States  shall  be  un- 
restricted. It  is  only  after  the  importation  is  completed  and  the 
property  imported  has  mingled  with  and  become  a  part  of  the  gen- 
eral property  of  the  State,  that  its  regulations  can  act  upon  it, 
except  so  far  as  may  be  necessary  to  insure  safety  in  the  disposition 
of  the  import  until  thus  mingled." 

The  conclusion  follows  that,  as  the  grant  of  the  power  to  regu- 
late commerce  among  the  States,  so  far  as  one  system  is  required,  is 
exclusive,  the  States  cannot  exercise  that  power  without  the  assent 
of  Congress,  and,  in  the  absence  of  legislation,  it  is  left  for  the 
courts  to  determine  when  State  action  does  or  does  not  amount  to 
such  exercise,  or,  in  other  words,  what  is  or  is  not  a  regulation  of 
such  commerce.  When  that  is  determined,  controversy  is  at  an 
end.  *  *  *  * 

These  decisions  rest  upon  the  undoubted  right  of  the  States  of  the 
Union  to  control  their  purely  internal  affairs,  in  doing  which  they 
exercise  powers  not  surrendered  to  the  national  government;  but 
whenever  the  law  of  the  State  amounts  essentially  to  a  regulation 
of  commerce  with  foreign  nations  or  among  the  States,  as  it  does 
when  it  inhibits,  directly  or  indirectly,  the  receipt  of  an  imported 
commodity  or  its  disposition  before  it  has  ceased  to  become  an  arti- 
cle of  trade  between  one  State  and  another,  or  another  country  and 
this,  it  comes  in  conflict  with  a  power  which,  in  this  particular,  has 
been  exclusively  vested  in  the  general  government,  and  is  therefore 
void.*  *  *  * 

The  plaintiffs  in  error  are  citizens  of  Illinois,  are  not  pharmacists, 
and  have  no  permit,  but  import  into  Iowa  beer,  which  they  sell  in 
original  packages,  as  described.  Under  our  decision  in  Bowman  v. 
Chicago,  &c,  Railway  Co.,  they  had  the  right  to  import  this  beer 
into  that  State,  and  in  the  view  which  we  have  expressed  they 
had  the  right  to  sell  it,  by  which  act  alone  it  would  become  mingled 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  199 

in  the  common  mass  of  property  within  the  State.  Up  to  that  point 
of  time,  we  hold  that  in  the  absence  of  congressional  permission  to 
do  so,  the  State  had  no  power  to  interfere  by  seizure,  or  any  other 
action,  in  prohibition  of  importation  and  sale  by  the  foreign  or  non- 
resident importer.  Whatever  our  individual  views  may  be  as  to  the 
deleterious  or  dangerous  qualities  of  particular  articles,  we  cannot 
hold  that  any  articles  which  Congress  recognizes  as  subjects  of  in- 
terstate commerce  are  not  such,  or  that  whatever  are  thus  recog- 
nized can  be  controlled  by  State  laws  amounting  to  regulations, 
while  they  retain  that  character;  although,  at  the  same  time,  if 
directly  dangerous  in  themselves,  the  State  may  take  appropriate 
measures  to  guard  against  injury  before  it  obtains  complete  juris- 
diction over  them.  To  concede  to  a  State  the  power  to  exclude, 
directly  or  indirectly,  articles  so  situated,  without  congressional  per- 
mission, is  to  concede  to  a  majority  of  the  people  of  a  State,  repre- 
sented in  the  State  legislature,  the  power  to  regulate  commercial 
intercourse  between  the  States,  by  determining  what  shall  be  its 
subjects,  when  that  power  was  distinctly  granted  to  be  exercised 
by  the  people  of  the  United  States,  represented  in  Congress,  and 
its  possession  by  the  latter  was  considered  essential  to  that  more 
perfect  Union  which  the  Constitution  was  adopted  to  create.  Un- 
doubtedly, there  is  difficulty  in  drawing  the  line  between  the  muni- 
cipal powers  of  the  one  government  and  the  commercial  powers 
of  the'other,  but  when  that  line  is  determined,  in  the  particular  in- 
stance, accommodation  to  it,  without  serious  inconvenience,  may 
readily  be  found,  to  use  the  language  of  Mr.  Justice  Johnson,  in 
Gibbons  v.  Ogden,  9  Wheat.  1,  238,  in  "a  frank  and  candid  co-op- 
eration for  the  general  good." 

The  legislation  in  question  is  to  the  extent  indicated  repugnant 
to  the  third  clause  of  Section  8  of  Art.  1  of  the  Constitution  of  the 
United  States,  and  therefore  the  judgment  of  the  Supreme  Court  of 
Iowa  is 

Reversed  and  the  cause  remanded  for  further  proceedings 
not  inconsistent  with  this  opinion. 


Note. — Immediately  after  this  decision  Congress  passed  the  Act  of  August 
8  1890,  known  as  the  Wilson  Act, which  provides:  "That  all  fermented, 
distilled,  or  other  intoxicating  liquors  or  liquids  transported  into  any  State 
or  Territory  or  remaining  therein  for  use,  consumption,  sale  or  storage 
therein,  shall  upon  arrival  in  such  State  or  Territory  be  subject  to  the 
operation  and  effect  of  the  laws  of  such  State  or  Territory  enacted  in 
exercise  of  its  police  powers,  to  the  same  extent  and  in  the  same  manner 
as  though  such  liquids  or  liquors  had  been  produced  in  such  State  or  Terri- 
tory, and  shall  not  be  exempt  therefrom  by  reason  of  being  introduced 
therein  in  original  packages  or  otherwise."  The  validity  of  this  act  was 
upheld  in  In  re  Rahrer,  140  U.  S.  545. 

See  also  the  Webb  Act  in  appendix,  page  338,  and  Adams  Express  Co.  v. 
Kentucky,  with  note  thereto,  page  339. 


2oo  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

AUSTIN  v.  TENNESSEE. 
179  U.  S.,  343.     1900. 

The  State  of  Tennessee  forbade  the  sale  of  cigarettes  within  the 
State  under  the  following  act  of  1897:  "It  shall  be  a  misdemeanor 
for  any  person,  firm  or  corporation  to  sell,  offer  to  sell,  or  bring 
into  the  State  for  the  purpose  of  selling,  giving  away  or  otherwise 
disposing  of  any  cigarettes,  cigarette  paper,  or  substitute  for  the 
same."  *  *  *  * 

Austin  was  convicted  of  a  violation  of  the  statute  and  committed 
to(  jail  until  payment  of  a  fine.  The  facts  of  the  case  showed 
that  the  defendant  had  purchased  a  lot  of  cigarettes  from  the 
American  Tobacco  Company,  in  Durham,  North  Carolina,  where 
the  same  had  been  manufactured  and  put  into  pasteboard  boxes 
containing  ten  cigarettes  each,  properly  marked,  stamped  and  labeled 
as  prescribed  by  the  United  States  revenue  laws.  That  after  the 
purchase,  the  American  Tobacco  Company  piled  upon  the  floor  of 
its  warehouse,  in  Durham,  the  number  of  boxes  or  packages  sold 
and  notified  the  Southern  Express  Company  to  come  and  get  them. 
The  express  company  placed  them  in  an  open  basket  and  delivered 
them  to  the  defendant  in  Tennessee.  The  defendant  sold  one  of 
the  packages  of  ten  cigarettes  without  breaking  it.  The  Supreme 
Court  of  Tennessee  upheld  the  conviction  on  the  ground  that  (1) 
cigarettes  were  not  legitimate  articles  of  commerce;  (2)  the  pack- 
ages in  which  the  cigarettes  were  sold  were  not  original  packages 
in  the  true  commercial  sense.  Appeal  was  taken  to  the  Supreme 
Court  of  the  United  States. 

MR.  JUSTICE  BROWN  delivered  the  opinion  of  the  court. 

It  is  charged  that  the  act  in  question,  in  its  application  to  the 
facts  of  the  case,  is  an  infringement  upon  the  exclusive  power  of 
Congress  to  regulate  commerce  between  the  States.  This  is  the  sole 
question  presented  for  our  determination.  We  are  not  disposed  to 
question  the  general  principle  that  the  States  cannot,  under  the 
guise  of  inspection  or  revenue  laws,  forbid  or  impede  the  introduc- 
tion of  products,  and  more  particularly  of  food  products,  univer- 
sally recognized  as  harmless,  or  otherwise  burden  foreign  or  inter- 
state commerce  by  regulations  adopted  under  the  assumed  police 
power  of  the  State,  but  obviously  for  the  purpose  of  taxing  such 
commerce  or  creating  discriminations  in  favor  of  home  producers 
or  manufacturers.  We  are  not  prepared  to  fully  indorse  the  opin- 
ion of  the  court,  upon  the  first  point.  Whatever  product  has  from 
time  immemorial  been  recognized  by  custom  or  law  as  a  fit  sub- 
ject for  barter  or  sale,  particularly  if  its  manufacture  has  been  made 
the  subject  of  Federal  regulation  and  taxation,  must,  we  think,  be 
recognized  as  a  legitimate  article  of  commerce,  although  it  may  to 
a  certain  extent  be  within  the  police  power  of  the  States.  Of  this 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  201 

class  of  cases  is  tobacco.  From  the  first  settlement  of  the  colony 
of  Virginia  to  the  present  day  tobacco  has  been  one  of  the  most 
profitable  and  important  products  of  agriculture  and  commerce,  and 
while  its  effects  may  be  injurious  to  some,  its  extensive  use  over 
practically  the  entire  globe  is  a  remarkable  tribute  to  its  popularity 
and  value.  We  are  clearly  of  opinion  that  it  cannot  be  classed  with 
diseased  cattle  or  meats,  decayed  fruit  or  other  articles,  the  use  of 
which  is  a  menace  to  the  health  of  the  entire  community  *  *  *  there 
is  no  reason  to  doubt  the  good  faith  of  the  legislature  of  Tennessee 
in  prohibiting  the  sale  of  cigarettes  as  a  sanitary  measure,  and  if 
it  be  inoperative  as  applied  to  sales  by  the  owner  in  the  original 
packages,  of  cigarettes  manufactured  in  and  brought  from  another 
State,  we  are  remitted  to  the  inquiry  whether  a  paper  package  of 
three  inches  in  length  and  one  and  one-half  inches  in  width,  con- 
taining ten  cigarettes  is  an  original  package  protected  by  the  Con- 
stitution of  the  United  States  against  any  interference  by  the  State 
while  in  the  hands  of  the  importer?  The  real  question  in  this  case 
is  whether  the  size  of  the  package  in  which  the  importation  is  ac- 
tually made  is  to  govern ;  or,  the  size  of  the  package  in  which  bona- 
fide  transactions  are  carried  on  between  the  manufacturer  and  the 
wholesale  dealer  residing  in  different  States.  We  hold  to  the  latter 
view.  The  whole  theory  of  the  exemption  of  the  original  package 
from  the  operation  of  State  laws  is  based  upon  the  idea  that  the 
property  is  imported  in  the  ordinary  form  in  which,  from  time 
immemorial,  foreign  goods  have  been  brought  into  the  country. 
*  *  #  *  And  yet  we  are  told  that  each  one  of  these  packages  is 
an  original  package,  and  entitled  to  the  protection  of  the  Constitu- 
tion of  the  United  States  as  a  separate  and  distinct  importation.  We 
can  only  look  upon  it  as  a  discreditable  subterfuge,  to  which  this 
court  ought  not  to  lend  its  countenance,  If  there  be  any  original 
package  at  all  in  this  case,  we  think  it  is  the  basket  and  not  the  paper 
box.  We  are  satisfied  that  the  conclusi'on  of  the  Supreme  Court  of 
Tennessee  is  correct,  and  it  is  therefore  Affirmed. 


SCHOLLENBERGER  v.  PENNSYLVANIA. 
171  U.  S.,  1.    1898. 

Schollenberger  with  others  was  convicted  of  a  violation  of  a 
statute  of  Pennsylvania,  Act  of  May  21,  1885,  which  prohibited  the 
sale  of  oleomargarine.  From  the  evidence  it  appeared  that  Schol- 
lenberger was  the  agent  in  Pennsylvania  for  the  sale  of  the  product 
on  behalf  of  a  manufacturer  in  Rhode  Island.  Also,  the  man- 
ufacturer and  agent  had  complied  with  the  provisions  of  the  Act 
of  Congress  of  August  2,  1886,  imposing  a  tax  upon  the  business. 
A.  tub  containing  forty  pounds  of  oleomargine,  packed,  stamped 
and  branded  as  required  by  the  Act  of  Congress  was  shipped  to 
Schollenberger  from  Rhode  Island,  who  sold  the  same  to  a  pur- 


202  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

chaser,  as  an  article  of  food.  The  Supreme  Court  of  Pennsylvania 
upheld  the  constitutionality  of  the  State  statute  on  the  ground  that  it 
was  a  legitimate  exercise  of  the  police  power  of  the  State  in  protect- 
ing the  health  of  its  citizens;  also,  that  the  statute  did  not  prevent 
oleomargarine  being  brought  within  the  State  and  sold  to  the  whole- 
sale dealer  in  original  packages,  but  affected  only  its  retail  sale. 
An  appeal  from  this  decision  was  taken  to  the  Supreme  Court  of  the 
United  States. 

MR.  JUSTICE  PECKHAM  delivered  the  opinion : 

In  the  examination  of  this  subject  the  first  question  to  be  con- 
sidered is  whether  oleomargarine  is  an  article  of  commerce?  No 
affirmative  evidence  from  witnesses  called  to  the  stand  and  speaking 
directly  on  that  subject  is  found  in  the  record.  We  must  determine 
the  question  with  reference  to  those  facts  which  are  so  well  and 
universally  known  that  courts  will  take  notice  of  them  without  par- 
ticular proof  being  adduced  in  regard  to  them,  and  also  by  refer- 
ence to  those  dealings  of  the  commercial  world  which  are  of  like 
notoriety.  (The  court  then  discusses  the  Act  of  Congress  of  1886 
regulating  the  manufacture  and  sale  of  oleomargarine  and  reaches 
the  conclusion  that  it  is  a  recognized  article  of  commerce.) 

This  act  shows  that  Congress  at  the  time  of  its  passage  in  1886 
recognized  the  article  as  a  proper  subject  of  taxation  and  as  one 
which  was  the  subject  of  traffic  and  of  exportation  to  foreign  coun- 
tries and  of  importation  from  such  countries.  Its  manufacture 
was  recognized  as  a  lawful  pursuit,  and  taxation  was  levied  upon 
the  manufacturer  of  the  article,  upon  the  wholesale  and  retail  deal- 
ers therein,  and  also  upon  the  article  itself.  *  *  *  * 

Upon  all  these  facts  we  think  it  apparent  that  oleomargarine  has 
become  a  proper  subject  of  commerce  among  the  States  and  with 
foreign  nations. 

The  general  rule  to  be  deduced  from  the  decisions  of  this  court 
is  that  a  lawful  article  of  commerce  cannot  be  wholly  excluded  from 
importation  into  a  State  from  another  State  where  it  was  manufac- 
tured or  grown.  A  State  has  power  to  regulate  the  introduction  of 
any  article,  including  a  food  product,  so  as  to  insure  purity  of  the 
article  imported,  but  such  police  power  does  not  include  the  total 
exclusion  even  of  an  article  of  food.  *  *  * 

We  do  not  think  the  fact  that  the  article  is  subject  to  be  adulter- 
ated by  dishonest  persons,  in  the  course  of  its  manufacture,  with 
other  substances,  which  it  is  claimed  may  in  some  instances  become 
deleterious  to  health,  creates  the  right  of  any  State  through  its  legis- 
lature to  forbid  the  introduction  of  the  unadulterated  article  into  the 
State.  The  fact  that  the  article  is  liable  to  adulteration  in  the 
course  of  manufacture,  and  that  the  articles  with  which  it  may  be 
mixed  may  possibly  and  under  some  circumstances  be  deleterious  to 
the  health  of  those  who  consume  it,  is  known  to  us  by  means  of 
various  references  to  the  subject  in  books  and  encyclopaedias,  but 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  203 

there  was  no  affirmative  evidence  offered  on  the  trial  to  prove  the 
fact.  From  these  sources  of  information  it  may  be  admitted  that 
oleomargarine  in  the  course  of  its  manufacture^  may  sometimes  be 
adulterated  by  dishonest  manufacturers  with  articles  that  possibly 
may  become  injurious  to  health.  Conceding  the  fact,  we  yet  deny 
the  right  of  a  State  to  absolutely  prohibit  the  introduction  within  its 
borders  of  an  article  of  commerce,  which  is  not  adulterated  and 
which  in  its  pure  state  is  healthful,  simply  because  such  an  article 
in  the  course  of  its  manufacture  may  be  adulterated  by  dishonest 
manufacturers  for  purposes  of  fraud  or  illegal  gains.  The  bad  ar- 
ticle may  be  prohibited,  but  not  the  pure  and  healthy  one.  *  *  *  * 

We  are  not  aware  of  any  such  distinction  as  is  attempted  to  be 
drawn  by  the  court  below  in  these  cases  between  a  sale  at  wholesale 
to  individuals  engaged  in  the  wholesale  trade  or  one  at  retail  to  the 
consumer.  How  small  may  be  an  original  package  it  is  not  neces- 
sary here  to  determine.  We  do  say  that  a  sale  of  a  ten  pound  pack- 
age of  oleomargarine,  manufactured,  packed,  marked,  imported  and 
sold  under  the  circumstances  set  forth  in  detail  in  the  special  ver- 
dict, was  a  valid  sale,  although  to  a  person  who  was  himself  a  con- 
sumer. We  do  not  say  or  intimate  that  this  right  of  sale  extended 
beyond  the  first  sale  by  the  importer  after  its  arrival  within  the 
State.  Waring  v.  The  Mayor,  8  Wall.  110,  122.  The  importer 
had  the  right  to  sell  not  only  personally,  but  he  had  the  right  to 
employ  an  agent  to  sell  for  him.  Otherwise  his  right  to  sell  would 
be  substantially  valueless,  for  it  cannot  be  supposed  that  he  would 
be  personally  engaged  in  the  sale  of  every  original  package  sent  to 
the  different  States  in  the  Union.  Having  the  right  to  sell  through 
his  agent,  a  sale  thus  effected  is  valid. 

The  right  of  the  importer  to  sell  cannot  depend  upon  whether  the 
original  package  is  suitable  for  retail  trade  or  not.  His  right  to 
sell  is  the  same,  whether  to  consumers  or  to  wholesale  dealers  in 
the  article,  provided  he  sells  them  in  original  packages.  This  does 
not  interfere  with  the  acknowledged  right  of  the  State  to  use  such 
means  as  may  be  necessary  to  prevent  the  introduction  of  an 
adulterated  article,  and  for  that  purpose  to  inspect  and  test  the 
article  introduced,  provided  the  State  law  does  really  inspect  and 
does  not  substantially  prohibit  the  introduction  of  the  pure  article 
and  thereby  interferes  with  interstate  commerce.  It  cannot  for  the 
purpose  of  preventing  the  introduction  of  an  impure  or  adulterated 
article,  absolutely  prohibit  the  introduction  of  that  which  is  pure  and 
wholesome.  The  Act  of  the  Legislature  of  Pennsylvania,  under 
consideration,  to  the  extent  that  it  prohibts  the  introduction  of 
oleomargarine  from  another  State  and  its  sale  in  the  original  pack- 
age, as  described  in  the  special  verdict,  is  invalid. 

The  judgments  are  there-fore  reversed  and  the  cases  remanded 
to  the  Supreme  Court  of  Pennsylvania  for  further  proceed- 
ings  not  inconsistent  with  this  opinion. 


204  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

MINNESOTA  v.  BARBER. 
136  U.  S.,  313.    1890. 

Henry  E.  Barber  was  convicted  of  the  offence  of  offering  meat 
for  sale  in  Minnesota  in  violation  of  a  statute  of  the  State  passed 
April  16,  1889.  The  act  of  1889  was  entitled  "An  act  for  the  pro- 
tection of  the  public  health  by  providing  for  inspection,  before 
slaughter,  of  cattle,  sheep  and  swine  designed  for  slaughter  for 
human  food."  By  the  third  section  of  the  act  it  was  declared  to 
be  the  duty  of  the  inspectors  appointed  under  the  act  to  inspect  all 
cattle,sheep  and  swine  slaughtered  for  human  food  within  their 
respective  jurisdictions  within  twenty-four  hours  before  the  slaugh- 
ter of  the  same,  and  if  found  healthy  and  in  suitable  condition  to 
be  slaughtered  for  human  food  to  give  to  the  applicant  a  certificate 
in  writing  to  that  effect.  If  found  unfit  for  food,  such  inspectors 
were  to  order  the  immediate  removal  and  destruction  of  such  dis- 
eased animals.  The  act  made  it  a  misdemeanor  punishable  by  fine 
and  imprisonment  to  expose  or  offer  for  sale  any  meat  which  had 
been  taken  from  an  animal  not  so  inspected  and  certified  before 
slaughter.  Barber  sued  out  a  writ  of  habeas  corpus  to  be  released 
from  jail  in  the  Circuit  Court  of  the  United  States  for  the  Dis- 
trict of  Minnesota  upon  the  ground  that  the  act  of  1889  was  re- 
pugnant to  the  provision  of  the  Constitution  giving  Congress  power 
to  regulate  commerce  among  the  several  States.  The  Circuit  Court 
held  the  statute  to  be  in  violation  of  the  Constitution  and  discharged 
the  prisoner  from  custody.  The  State  of  Minnesota  then  appealed 
to  the  United  States  Supreme  Court. 

MR.  JUSTICE  HARLAN  delivered  the  opinion  of  the  court. 

As  the  inspection  must  take  place  within  the  twenty-four  hours 
immediately  before  the  slaughtering,  the  act,  by  its  necessary  oper- 
ation, excludes  from  the  Minnesota  market,  practically,  all  fresh 
beef,  veal,  mutton,  lamb  or  pork — in  whatever  form,  and  although 
entirely  sound,  healthy,  and  fit  for  human  food — taken  from  ani- 
mals slaughtered  in  other  States;  and  directly  tends  to  restrict  the 
slaughtering  of  animals,  whose  meat  is  to  be  sold  in  Minnesota  for 
human  food,  to  those  engaged  in  such  business  in  that  State.  This 
must  be  so,  because  the  time,  expense  and  labor  of  sending  animals 
from  points  outside  of  Minnesota  to  points  in  that  State  to  be  there 
inspected,  and  bringing  them  back,  after  inspection  to  be  slaughtered 
at  the  place  from  which  they  were  sent — the  slaughtering  to  take 
place  within  twenty- four  hours  after  inspection,  else  the  certificate 
of  inspection  becomes  of  no  value — will  be  so  great  as  to  amount 
to  an  absolute  prohibition  upon  sales  in  Minnesota,  of  meat  from 
animals  not  slaughtered  within  its  limits.  When  to  this  is  added 
the  fact  that  the  statute,  by  its  necessary  operation,  prohibits  the 
sale,  in  the  State,  of  fresh  beef,  veal,  mutton,  lamb  or  pork,  from 
animals  that  may  have  been  inspected  carefully  and  thoroughly 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  205 

in  the  State  where  they  were  slaughtered,  and  before  they  were 
slaughtered,  no  doubt  can  remain  as  to  its  effect  upon  commerce 
among  the  several  States.  It  will  not  do  to  say — certainly  no 
judicial  tribunal  can,  with  propriety,  assume — that  the  people  of 
Minnesota  may  not,  with  due  regard  to  their  health,  rely  upon 
inspections  in  other  States  of  animals  there  slaughtered  for  purposes 
of  human  food.  If  the  object  of  the  statute  had  been  to  deny  alto- 
gether to  the  citizens  of  other  States  the  privilege  of  selling,  within 
the  limits  of  Minnesota,  for  human  food,  any  fresh  beef,  veal, 
mutton,  lamb  or  pork,  from  animals  slaughtered  outside  of  that 
State  and  to  compel  the  people  of  Minnesota  wishing  to  buy  such 
meats,  either  to  purchase  those  taken  from  animals  slaughtered  in 
the  State,  or  to  incur  the  cost  of  purchasing  them,  when  desired 
for  their  own  personal  use,  at  points  beyond  the  State,  that  object 
is  attained  by  the  act  in  question.  Our  duty  to  maintain  the  Con- 
stitution will  not  permit  us  to  shut  our  eyes  to  these  obvious  and 
necessary  results  of  the  Minnesota  statute.  If  this  legislation  does 
not  make  such  discrimination  against  the  products  and  business  of 
other  States  in  favor  of  the  products  and  business  of  Minnesota 
as  interferes  with  and  burdens  commerce  among  the  several  States, 
it  would  be  difficult  to  enact  legislation  that  would  have  that  re- 
sult. *  *  *  * 

A  law  providing  for  the  inspection  of  animals  whose  meats  are 
designed  for  human  food  cannot  be  regarded  as  a  rightful  exer- 
tion of  the  police  powers  of  the  State,  if  the  inspection  prescribed 
is  of  such  a  character,  or  is  burdened  with  such  conditions,  as  will 
prevent  altogether  the  introduction  into  the  State  of  sound  meats, 
the  products  of  animals  slaughtered  in  other  States.  It  is  one  thing 
for  a  State  to  exclude  from  its  limits  cattle,  sheep  or  swine,  actually 
diseased,  or  meats  that  by  reason  of  their  condition,  or  the  condition 
of  the  animal  from  which  they  are  taken,  are  unfit  for  human 
food,  and  punish  all  sales  of  such  animals  or  of  such  meats  within 
its  limits.  It  is  quite  a  different  thing  for  a  State  to  declare  as 
does  Minnesota  by  the  necessary  operation  of  its  statute  that  fresh 
beef,  veal,  mutton,  lamb  or  pork — articles  that  are  used  in  every 
part  of  this  country  to  support  human  life — shall  not  be  sold  for 
human  food  within  its  limits,  unless  the  animal  from  which  such 
meats  are  taken  is  inspected  in  that  State,  or,  as  is  practically  said, 
unless  the  animal  is  slaughtered  in  that  State. 

In  the  opinion  of  the  court  the  statute  in  question  *  *  *  is 
in  violation  of  the  Constitution  and  void. 

Judgment  discharging  the  appellee  (Barber}  from  custody 
is  affirmed. 


206  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

GEORGE  M'DERMOTT  v.  STATE  OF  WISCONSIN. 

T.  H.  GRADY  v.  STATE  OF  WISCONSIN. 

228  U.  S.  115.    1913. 


The  State  of  Wisconsin  enacted  a  law  in  1907  making  it  a  mis- 
demeanor to  sell  any  syrup  or  molasses,  unless  the  barrel,  cask,  keg, 
can,  pail  or  other  original  container  containing  the  same  be  distinctly 
branded  or  labeled  so  as  to  plainly  show  the  true  name  of  each  and 
all  the  ingredients  composing  such  mixture,  as  follows:  "In  case 
such  mixture  shall  contain  glucose  in  a  proportion  exceeding  GE  per 
cent,  by  weight,  it  shall  be  labeled  and  sold  as  'Glucose  flavored  with 
Maple  Syrup,'  'Glucose  flavored  with  Sugar-cane  Syrup'  *  * 
'Glucose  flavored  with  Refiners'  Syrup/  *  *  as  the  case  may 
be.  *  *  The  mixture  or  syrups  designated  in  this  section  shall 
have  no  other  designation  or  brand  than  herein  required  that 
represents  or  is  the  name  of  any  article  which  contains  a  sacharin 
substance."  McDermott  and  Grady  were  retail  merchants  in  Ore- 
gon, Wisconsin,  and  each  had  bought  for  himself  for  resale 
from  wholesale  grocers  in  Chicago,  and  had  received  by  rail  from 
that  city  twelve  one-half  gallon  tin  cans  or  pails  of  Karo  Corn 
Syrup,  each  shipment  being  made  in  wooden  boxes  containing  the 
cans.  When  the  goods  were  received  at  their  stores,  McDermott 
and  Grady  took  the  cans  from  the  boxes,  placed  them  on  shelves 
for  sale  at  retail,  and  destroyed  the  boxes  in  which  the  goods  were 
shipped  to  them  as  was  customary  in  such  cases.  The  cans  which 
were  sent  to  McDermott  were  labeled  "Karo  Corn  Syrup,  10% 
Cane  Syrup,  90%  Corn  Syrup."  The  cans  which  were  sent  to  Grady 
were  labeled  "Karo  Corn  Syrup  with  Cane  Flavor,  Corn  Syrup, 
85%." 

Proceedings  were  brought  against  Grady  and  McDermott  for 
violations  of  the  State  Pure  Food  Law.  They  defended  on  the 
ground  that  they  had  complied  with  the  Federal  Pure  Food  and 
Drugs  Act  passed  by  Congress  under  authority  of  the  Constitution 
of  the  United  States,  and  that  their  labels  were  in  conformity  with 
the  requirements  of  the  Federal  Act  as  interpreted  by  the  proper 
Federal  officials,  and  introduced  in  evidence  a  letter  from  the  Secre- 
taries of  Agriculture,  Commerce  and  Labor  made  under  the  claimed 
authority  of  that  Act  which  authorized  the  branding  of  "Karo"  as 
"corn  syrup  with  cane  flavor." 

The  defendants  claimed  that  in  order  to  comply  with  the  State 
law  they  would  have  to  remove  the  labels  which  they  put  on  in 
order  to  comply  with  the  Federal  law,  that  the  Federal  Food  and 
Drugs  Act  has  taken  possession  of  this  field  of  regulation,  and  that 
the  State  Act  is  a  wrongful  interference  with  the  exclusive  power 
of  Congress  over  interstate  commerce  in  which  the  goods  in  question 
were  shipped. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  207 

MR.  JUSTICE  DAY  delivered  the  opinion  of  the  Court : 

To  require  the  removal  or  destruction  before  the  goods  are  sold 
of  the  evidence  which  Congress  has  by  the  food  and  drugs  act,  as 
we  shall  see,  provided  may  be  examined  to  determine  the  compliance 
or  noncompliance  with  the  regulations  of  the  Federal  law,  is  beyond 
the  power  of  the  State.  The  Wisconsin  act  which  permits  the  sale 
of  articles  subject  to  the  regulations  of  interstate  commerce  only 
upon  condition  that  they  contain  the  exclusive  labels  required  by 
the  statutes  is  an  act  in  excess  of  its  legitimate  power. 

It  is  insisted,  however,  that,  since  at  the  time  when  the  State  act 
undertook  to  regulate  the  branding  of  these  goods,  namely,  when 
in  the  possession  of  the  plaintiffs  in  error,  and  held  upon  their 
shelves  for  sale,  the  cans  had  been  removed  from  the  boxes  in 
which  they  were  shipped  in  interstate  commerce,  they  had  therefore 
passed  beyond  the  jurisdiction  of  Congress,  and  their  regulation  was 
exclusively  a  matter  for  state  legislation.  This  assertion  is  based 
upon  the  original-package  doctrine  as  it  is  said  to  have  been  laid 
down  in  the  former  decisions  in  this  court.  The  term  "original- 
package"  had  its  origin  in  Brown  v.  Maryland,  12  Wheat.  419,  in 
which  this  court  had  to  consider  the  extent  of  the  protection  given 
under  Federal  authority  to  articles  imported  into  this  country  from 
abroad  for  sale,  and  it  was  there  held  that  (p.  441)  : 

"When  the  importer  has  so  acted  upon  the  thing  imported  that  it 
has  become  incorporated  and  mixed  up  with  the  mass  of  property 
in  the  country,  it  has,  perhaps,  lost  its  distinctive  character  as  an  im- 
port, and  has  become  subject  to  the  taxing  power  of  the  State;  but 
while  remaining  the  property  of  the  importer,  in  his  warehouse,  in 
the  original  form  or  package  in  which  it  was  imported,  a  tax  upon 
it  is  too  plainly  a  duty  on  imports  to  escape  the  prohibition  in  the 
Constitution." 

That  doctrine  has  been  many  times  applied  in  the  decisions  of 
this  Court  in  defining  the  line  of  demarcation  which  shall  separate 
the  Federal  from  the  State  authority  where  the  sovereign  power  of 
the  nation  or  State  is  involved  in  dealing  with  property.  And  where 
it  has  been  found  necessary  to  decide  the  boundary  of  Federal  au- 
thority, it  has  been  generally  held  that,  where  goods  prepared  and 
packed  for  shipment  in  interstate  commerce  are  transported  in  such 
commerce,  and  delivered  to  the  consignee,  and  the  package  by  him 
separated  into  its  component  parts,  the  power  of  Federal  regulation 
has  ceased  and  that  of  the  State  may  be  asserted.  *  *  *  *  In 
the  view,  however,  which  we  take  of  this  case,  it  is  unnecessary  to 
enter  upon  any  extended  consideration  of  the  nature  and  scope  of 
the  principles  involved  in  determining  what  is  an  original-package. 
For,  as  we  have  said,  keeping  within  its  constitutional  limitation  of 
authority,  Congress  may  determine  for  itself  the  character  of  the 
means  necessary  to  make  its  purpose  effectual  in  preventing  the 
shipment  in  interstate  commerce  of  articles  of  a  harmful  character, 
and  to  this  end  may  provide  the  means  of  inspection,  examination, 


2o8  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

and  seizure  necessary  to  enforce  the  prohibitions  of  the  act,  and 
when  Sec.  2  has  been  violated,  the  Federal  authority,  in  enforcing 
either  Sec.  2  or  Sec.  10,  may  follow  the  adulterated  or  misbranded 
article  at  least  to  the  shelf  of  the  importer. 

Congress,  having  made  adulterated  and  misbranded  articles  con- 
traband of  interstate  commerce,  in  the  manner  we  have  already 
pointed  out,  provides  in  Sec.  10  of  the  act  that  such  articles  may  be 
proceeded  against  and  seized  for  confiscation  and  condemnation 
while  being  transported  from  one  State,  territory,  district,  or  insular 
possession  to  another  for  sale,  or,  having  been  transported,  remain- 
ing "unloaded,  unsold,  or  in  original  unbroken  packages,"  and  the 
subsequent  provisions  of  the  section  regulate  the  disposition  of  the 
articles  seized.  To  make  the  provisions  of  the  act  effectual,  Con- 
gress has  provided  not  only  for  the  seizure  of  the  goods  while  being 
actually  transported  in  interstate  commerce,  but  has  also  provided 
for  such  seizure  after  such  transportation  and  while  the  goods  re- 
main "unloaded,  unsold,  or  in  original  unbroken  packages."  The 
opportunity  for  inspection  en  route  may  be  very  inadequate.  The 
real  opportunity  of  government  inspection  may  only  arise  when,  as 
in  the  present  case,  the  goods  as  packed  have  been  removed  from 
the  outside  box  in  which  they  were  shipped,  and  remain,  as  the  act 
provides,  "unsold."  It  is  enough,  by  the  terms  of  the  act,  if  the 
articles  are  unsold,  whether  in  original  packages  or  not.  Bearing 
in  mind  the  authority  of  Congress  to  make  effectual  regulations  to 
keep  impure  or  misbranded  articles  out  of  the  channels  of  interstate 
commerce,  we  think  the  provisions  of  Sec.  10  are  clearly  within 
its  power.  Indeed  it  seems  evident  that  they  are  measures  essential 
to  the  accomplishment  of  the  purpose  of  the  act. 

The  doctrine  of  original  package  had  its  origin  in  the  opinion  of 
Chief  Justice  Marshall  in  Brown  v.  Maryland,  already  referred  to. 
It  was  intended  to  protect  the  importer  in  the  right  to  sell  the  im- 
ported goods  which  was  the  real  object  and  purpose  of  importation. 
To  determine  the  time  when  an  article  passes  out  of  interstate  into 
State  jurisdiction  for  the  purpose  of  taxation  is  entirely  different 
from  deciding  when  an  article  which  has  violated  a  Federal  prohibi- 
tion becomes  immune.  The  doctrine  was  not  intended  to  limit  the 
right  of  Congress,  now  asserted,  to  keep  the  channels  of  interstate 
commerce  free  from  the  carriage  of  injurious  or  fraudulently 
branded  articles,  and  to  choose  appropriate  means  to  that  end.  The 
legislative  means  provided  in  the  Federal  law  for  its  own  enforce- 
ment may  not  be  thwarted  by  State  legislation  having  a  direct  effect 
to  impair  the  effectual  exercise  of  such  means. 

For  the  reasons  stated,  the  statute  of  Wisconsin,  in  forbidding  all 
labels  other  than  the  one  it  prescribed,  is  invalid,  and  it  follows 
that  the  judgments  of  the  State  court  affirming  the  convictions  of 
the  plaintiffs  in  error  for  selling  the  articles  in  question  without  the 
exclusive  brand  required  by  the  State  must  be  reversed,  and  the 
cases  are  remanded  to  the  State  court  for  further  proceedings  not 
inconsistent  with  this  opinion. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  209 

INTERNATIONAL  TEXT-BOOK  COMPANY  v.  AARON  T. 

PIGG. 

217  U.  S.  91.     1910. 

The  International  Text-book  Company  is  a  Pennsylvania  corpora- 
tion, and  the  proprietor  of  the  International  Correspondence  Schools 
at  Scranton,  Pennsylvania.  The  company  has  a  capital  stock,  and 
the  profits  arising  from  its  business  are  distributed  in  dividends, 
or  applied  otherwise,  as  the  company  may  elect.  The  company  pre- 
pares and  publishes  instruction  papers,  text-books  and  illustrative 
apparatus  for  courses  of  study,  and  forwards  the  same  from  time 
to  time  to  students.  It  employs  local  or  traveling  agents  called 
solicitor-collectors,  who  procure  applications  for  scholarships  in  the 
correspondence  schools,  and  who  also  collect  and  forward  to  the 
company  deferred  payments  on  scholarships.  The  solicitor-collector 
for  the  State  of  Kansas  maintains  an  office  in  the  said  State,  at  his 
own  expense,  the  company  itself  having  no  office  of  its  own  in  the 
State.  The  defendant,  Aaron  T.  Pigg,  signed  a  written  contract 
with  the  company  at  Topeka,  Kansas,  which  was  accepted  at  Scran- 
ton,  for  a  course  in  commercial  law.  The  company  brought  suit  in 
a  Kansas  court  to  recover  an  unpaid  balance  due  by  him  upon  his 
contract. 

A  statute  of  Kansas  (Section  1283,  Kansas  General  Statutes  of 
1901)  provides  that  it  should  be  the  duty  of  the  president  and  secre- 
tary or  of  the  managing  officer  of  each  corporation  for  profit,  doing 
business  in  the  State,  except  banking,  insurance  and  railroad  corpor- 
ations, annually,  on  or  before  the  1st  day  of  August,  to  prepare 
and  deliver  to  the  Secretary  of  State  a  complete  detailed  statement 
of  the  condition  of  such  corporation  on  the  30th  day  of  June  next 
preceding.  Such  statement  was  to  set  forth  the  authorized  capital 
stock,  the  paid-up  stock,  the  par  and  market  value  per  share  of 
stock,  the  assets  and  liabilities  of  the  corporation,  and  a  list  of  its 
stockholders  and  officers.  The  statute  then  provided :  "*  *  *  * 
and  the  failure  to  file  such  statement  by  any  corporation  doing  busi- 
ness in  this  State,  and  not  organized  under  the  laws  of  this  State, 
shall  work  a  forfeiture  of  its  right  or  authority  to  do  business  tlw 
this  State.  *  *  *  *  No  action  shall  be  maintained  or  recovery 
had  in  any  of  the  courts  of  this  State  by  any  corporation  doing 
business  in  this  State  without  first  obtaining  the  certificate  of  the 
Secretary  of  State  that  the  statements  provided  for  in  this  section 
(1283)  have  been  properly  made." 

The  company  did  not,  before  bringing  this  suit,  file  the  statement 
required.  The  Supreme  Court  of  Kansas  decided  that  the  company 
was  not  entitled  to  maintain  its  suit  in  the  courts  of  Kansas.  The 
company  contended  that  the  effect  of  the  statute  was  to  discriminate 
against  it  as  an  agency  engaged  in  interstate  commerce. 

MR.  JUSTICE  HARLAN  delivered  the  opinion  of  the  court : 


210  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

In  view  of  the  nature  and  extent  of  the  business  of  the  Inter- 
national Text-book  Company  in  Kansas,  the  first  inquiry  is  whether 
the  statutory  prohibition  against  the  maintaining  of  an  action  in  a 
Kansas  court  by  "any  corporation  doing  business  in  this  (that) 
State"  embraces  the  plaintiff  corporation.  It  must  be  held,  as  the 
State  court  held,  that  it  does ;  for  it  is  conceded  that  the  Text-book 
Company  did  not,  before  bringing  this  suit,  make,  deliver,  and  file 
with  the  Secretary  of  State  either  the  statement  or  certificate  re- 
quired by  §  1283 ;  and  upon  any  reasonable  interpretation  of  the 
statute,  that  company,  both  at  the  date  of  the  contract  sued  on, 
and  when  this  action  was  brought,  must  be  held  as  "doing^  business" 
in  Kansas.  *  *  *  *  But  this  view  as  to  the  meaning  of  the 
Kansas  statute  does  not  necessarily  lead  to  an  affirmance  of  the 
judgment  below,  if,  as  the  plaintiff  contends,  the  business  in  which 
it  is  regularly  engaged  is  interstate  in  its  nature,  and  if  the  statute, 
by  its  necessary  operation,  materially  or  directly  burdens  that  busi- 
ness. It  is  true  that  the  business  in  which  the  International  Text- 
book Company  is  engaged  is  of  a  somewhat  exceptional  character, 
but,  in  our  judgment,  it  was,  in  its  essential  characteristics,  com- 
merce among  the  States  within  the  meaning  of  the  Constitution  of 
the  United  States.  It  involved,  as  already  suggested,  regular  and 
practically  continuous  intercourse,  between  the  Text-book  Com- 
pany, located  in  Pennsylvania,  and  its  scholars  and  agents  in  Kansas 
and  other  States.  That  intercourse  was  conducted  by  means  of 
correspondence  through  the  mails  with  such  agents  and  scholars. 
While  this  mode  of  imparting  and  acquiring  an  education  may  not 
be  such  as  is  commonly  adopted  in  this  country,  it  is  a  lawful  mode 
to  accomplish  the  valuable  purpose  the  parties  have  in  view.  More 
than  that,  this  mode — looking  at  the  contracts  between  the  Text- 
book Company  and  its  scholars — involved  the  transportation  from 
the  State  where  the  school  is  located  to  the  State  in  which  the  scholar 
resides,  of  books,  apparatus,  and  papers,  useful  or  necessary  in  the 
particular  course  of  study  the  scholar  is  pursuing,  and  in  respect  of 
which  he  is  entitled,  from  time  to  time,  by  virtue  of  his  contract, 
to  information  and  direction.  Intercourse  of  that  kind,  between 
parties  in  different  States — particularly  when  it  is  in  execution  of  a 
valid  contract  between  them — is  as  much  intercourse  in  the  constitu- 
tional sense,  as  intercourse  by  means  of  telegraph — "a  new  species 
of  commerce,"  to  use  the  words  of  this  court  in  Pensacola  Teleg. 
Co.  v.  Western  U.  Teleg.  Co.,  96  U.  S.  1.  *  *  *  *  Was  it 
competent  for  the  State  to  prescribe,  as  a  condition  of  the  right 
to  the  Text-book  Company  to  do  interstate  business  in  Kansas, 
such  as  was  transacted  with  Pigg,  that  it  should  prepare,  deliver, 
and  file  with  the  Secretary  of  State  the  statement  mentioned  in 
§  1283?  The  above  question  must  be  answered  in  the  negative 
upon  the  authority  of  former  adjudications  by  this  court.  A  case 
in  point  is  Crutcher  v.  Kentucky,  141  U.  S.  47,  often  referred  to 
and  never  qualified  by  any  subsequent  decision.  That  case  arose 
under  a  statute  of  Kentucky  regulating  agencies  of  foreign  express 
companies.  The  statute  required  as  a  condition  of  the  right  of  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  211 

agent  of  an  express  company  not  incorporated  by  the  laws  of  Ken- 
tucky, to  do  business  in  that  Commonwealth,  to  take  out  a  license 
from  the  State  Auditor,  and  to  make  and  file  in  the  Auditor's  office 
a  statement  showing  that  the  company  had  an  actual  capital  of  a 
given  amount,  either  in  cash  or  in  safe  investments,  exclusive  of 
costs.  These  requirements  were  held  by  this  court  to  be  in  violation 
of  the  Constitution  of  the  United  States  in  their  application  to 
foreign  corporations  engaged  in  interstate  commerce.  *  *  *  * 
It  is  true  that  the  statute  does  not,  in  terms,  require  the  corpora- 
tion of  another  State  engaged  in  interstate  commerce  to  take  out 
what  is  technically  "a  license"  to  transact  its  business  in  Kansas. 
But  it  denies  all  authority  to  do  business  in  Kansas  unless  the 
corporation  makes,  delivers,  and  files  a  "statement"  of  the  kind 
mentioned  in  §  1283.  The  effect  of  such  requirement  is  practically 
the  same  as  if  a  formal  license  was  required  as  a  condition  pre- 
cedent to  the  right  to  do  such  business.  In  either  case  it  imposes 
a  condition  upon  a  corporation  of  another  State  seeking  to  do  busi- 
ness in  Kansas,  which,  in  the  case  of  interstate  business,  is  a  regula- 
tion of  interstate  commerce  and  directly  burdens  such  commerce. 
The  State  cannot  thus  burden  interstate  commerce.  It  follows  that 
J:he  particular  clause  of  §  1283  requiring  that  "statement"  is  illegal 
and  void.  *  *  *  *  How  far  a  corporation  of  one  State  is  en- 
titled to  claim  in  another  State,  where  it  is  doing  business,  equality 
of  treatment  with  individual  citizens  in  respect  of  the  right  to  sue 
and  defend  in  the  courts,  is  a  question  which  the  exigencies  of  this 
case  do  not  require  to  be  definitely  ^decided.  *  *  *  *  It  re- 
sults that  the  provision  as  to  the  statement  in  §  1283  must  fall  before 
the  Constitution  of  the  United  States,  and  with  it — according  to 
the  established  rules  of  statutory  construction — must  fall  that  part 
of  the  same  section  which  provides  that  the  obtaining  of  the  certifi- 
cate of  the  Secretary  of  State  that  such  statement  has  been  properly 
made  shall  be  a  condition  precedent  to  the  right  of  the  plaintiff  to 
maintain  an  action  in  the  courts  of  Kansas. 

The  judgment  must  be  reversed. 


Note  i. — In  Lake  Shore  &  Michigan  Southern  Railway  Company  v.  State  of 
Ohio,  173  U.  S.  285  (1899),  the  Supreme  Court  held  constitutional  the  Ohio 
Statute  of  April  18th,  1889,  which  provided  that  each  railroad  company  should 
cause  three,  each  way,  of  its  regular  trains  carrying  passengers  to  stop  at  a 
station,  city  or  village  containing  over  three  thousand  inhabitants,  for  a  time 
sufficient  to  receive  and  let  off  passengers.  The  railway  company  failed  to 
stop  three  of  its  trains  at  West  Cleveland,  a  municipality  of  Ohio  having  over 
three  thousand  inhabitants.  In  an  action  brought  to  recover  the  penalties 
mentioned  in  the  act,  the  Supreme  Court,  by  Justice  Harlan  said :  "It  cannot 
be  adjudged  that  the  Ohio  statute  is  unconstitutional.  The  power  of  a  State 
by  appropriate  legislation  to  provide  for  the  public  convenience  stands  upon 
the  same  ground  precisely  as  its  power  by  appropriate  legislation  to  protect 
the  public  health,  the  public  morals  or  the  public  safety.  In  what  has  been 
said  we  have  assumed  that  the  statute  is  not  in  itself  unreasonable;  that  is; 
it  has  appropriate  relation  to  the  public  convenience,  does  not  go  beyond  the 


212  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

necessities  of  the  case,  and  is  not  directed  against  interstate  commerce. 
*  *  *  *  The  statute  does  not  stand  in  the  way  of  the  railroad  company 
running  as  many  trains  as  it  may  choose  between  Chicago  and  Buffalo  without 
stopping  at  intermediate  points,  or  only  at  very  large  cities  on  the  route,  if 
in  the  contingency  named  in  the  statute  the  required  number  of  trains  stop 
at  each  place  containing  three  thousand  inhabitants  long  enough  to  receive 
and  let  off  passengers.  *  *  *  *  We  perceive  in  the  legislation  of  Ohio 
no  basis  for  the  contention  that  the  State  has  invaded  the  domain  of  national 
authority  or  impaired  any  right  secured  by  the  National  Constitution.  *  *  *  *" 

Note  2. — Cleveland,  Cincinnati,  Chicago  &  St.  Louis  Railway  Company  v. 
Illinois,  177  U.  S.  514  (1900)'.  The  statute  of  Illinois  of  March  21st,  1874, 
provided  that  all  regular  passenger  trains  of  every  railroad  company  operating 
within  the  State  should  stop  a  sufficient  length  of  time  at  the  railroad  stations 
of  county  seats  to  receive  and  let  off  passengers  with  safety.  The  railroad 
company  ran  a  fast  train  called  the  Knickerbocker  Special  between  St.  Louis 
and  New  York,  devoted  exclusively  to  carrying  interstate  traffic  between  the 
points  named.  The  company  did  not  stop  the  special  train  at  Hillsboro,  a 
county  seat  in  the  State  of  Illinois,  but  provided  other  trains  which  adequately 
accommodated  the  local  traffic  to  and  from  Hillsboro.  The  Court  held  that 
the  statute  was  a  direct  burden  upon  interstate  commerce,  and  therefore 
unconstitutional.  It  said :  "It  is  evident  that  the  power  attempted  to  be 
exercised  under  this  statute  would  operate  as  a  serious  restriction  upon  the 
speed  of  trains  engaged  in  interstate  traffic,  and  might,  in  some  cases,  render 
it  impossible  for  trunk  lines  running  through  the  State  of  Illinois  to  compete 
with  other  lines  running  through  States  in  which  no  such  restrictions  were 
applied.  *  *  *  *  The  distinction  between  this  statute  and  regulations 
requiring  passenger  trains  to  stop  at  railroad  crossings  and  drawbridges,  and 
to  reduce  the  speed  of  trains  when  running  through  crowded  thoroughfares ; 
requiring  its  tracks  to  be  fenced,  and  a  bell  and  whistle4  to  be  attached  to 
each  engine,  signal  light  to  be  carried  at  night,  tariff  and  time  tables  to  be 
posted  at  proper  places  and  other  similar  requirements  contributing  to  the 
safety,  comfort,  and  convenience  of  their  patrons — is  too  obvious  to  require 
discussion." 


POWER  OF  STATE  TO  REGULATE  RATES. 

GEORGE  T.  SIMPSON  v.  DAVID  C.  SHEPARD,  ETC. 

MINNESOTA  RATE  CASES. 

Decided  by  U.  S.  Supreme  Court  June  9,  1913. 

These  suits  were  brought  by  stockholders  of  the  Northern  Pacific 
Railway  Company,  the  Great  Northern  Railway  Company  and  the 
Minneapolis  &  St.  Louis  Railroad  Company,  respectively,  to  restrain 
the  enforcement  of  two  orders  of  the  Railroad  &  Warehouse  Com- 
mission of  the  State  of  Minnesota,  and  two  acts  of  the  legislature 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  213 

of  that  State,  prescribing  maximum  charges  for  transportation  of 
freight  and  passengers,  and  to  prevent  the  adoption  or  maintenance 
of  these  rates  by  the  railroad  companies.  In  addition  to  the  com- 
panies, the  Attorney  General  of  the  State,  the  members  of  the 
Railroad  and  Warehouse  Commission,  and  also,  in  the  cases  of 
the  Northern  Pacific  and  Great  Northern  Companies,  certain  repre- 
sentative shippers  were  made  defendants. 

The  orders  and  acts,  which,  by  their  terms  related  solely  to 
charges  for  intrastate  transportation,  were  as  follows : 

(1)  The   commission's  order  of   September  6,    1906,  effective 
November  15,  1906,  fixing  the  maximum  class  rates  for  general  mer- 
chandise. 

(2)  The  act  approved  April  4,  1907,  to  take  effect  May  1,  1907, 
prescribing  2  cents  a  mile  as  the  maximum  fare  for  passengers, 
except  for  those  under  twelve  years  of  age,  for  whom  the  maximum 
rate  was  to  be  1  cent  a  mile.     Laws  of  1907,  chap.  176. 

(3)  The  act  approved  April   18,   1907,  to  take  effect  June   1, 
1907,  fixing  maximum  commodity  rates  for  carload  lots  of  specified 
weights.     Laws  of  1907,  chap.  232. 

(4)  The  commission's  order  of  May  3,  1907,  effective  June  3, 
1907,  establishing  maximum  "in-rates"  for  designated  commodities 
in  carload  lots  from  St.  Paul,  Minneapolis,  Minnesota  Transfer,  and 
Duluth  to  certain  distributing  centers.     No  complaint  is  made  of 
this  order  in  the  case  of  the  Minneapolis  &   St.   Louis   Railroad 
Company. 

The  complainants  assailed  the  acts  and  orders  upon  the  grounds 
(1)  that  they  amounted  to  an  unconstitutional  interference  with 
interstate  commerce;  (2)  that  they  were  confiscatory,  and  (3)  that 
the  penalties  imposed  for  their  violation  were  so  severe  as  to  result 
in  a  denial  of  the  equal  protection  of  the  laws  and  a  deprivation 
of  property  without  due  process  of  law. 

MR.  JUSTICE  HUGHES  delivered  the  opinion  of  the  court. 
First     As  to  interference  with  interstate  commerce. 

None  of  the  acts  and  orders  prescribes  rates  for  goods  or  persons 
moving  in  interstate  commerce.  By  their  terms,  they  apply  solely 
to  commerce  that  is  internal.  Despite  this  obvious  purport,  it  has 
been  found  below  that  the  inevitable  effect  of  the  State's  require- 
ments for  intrastate  transportation  was  to  impose  a  direct  burden 
upon  interstate  commerce,  and  to  create  unjust  discriminations 
between  localities  in  Minnesota  and  those  in  adjoining  States ;  and 
hence,  that  they  must  fall,  as  repugnant  to  the  commerce  clause 
and  to  the  action  of  Congress  under  it.  *  *  *  * 

The  grant  in  the  Constitution  of  its  own  force,  that  is,  without 
action  by  Congress,  established  the  essential  immunity  of  interstate 
commercial  intercourse  from  the  direct  control  of  the  States  with 
respect  to  those  subjects  embraced  within  the  grant  which  are  of 


214  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

such  a  nature  as  to  demand  that,  if  regulated  at  all,  their  regulation 
should  be  prescribed  by  a  single  authority.  It  has  repeatedly  been 
declared  by  this  court  that  as  to  those  subjects  which  require  a 
general  system  or  uniformity  of  regulation,  the  power  of  Congress 
is  exclusive.  In  other  matters,  admitting  of  diversity  of  treatment 
according  to  the  special  requirements  of  local  conditions,  the  States 
may  act  within  their  respective  jurisdictions  until  Congress  sees  fit 
to  act ;  and,  when  Congress  does  act,  the  exercise  of  its  authority 
overrides  all  conflicting  State  legislation.  Cooley  v.  Port  Wardens, 
12  How.  299,  319. 

The  principle  which  determines  this  classification  underlies  the 
doctrine  that  the  States  cannot,  under  any  guise,  impose  direct 
burdens  upon  interstate  commerce.  For  this  is  but  to  hold  that  the 
States  are  not  permitted  directly  to  regulate  or  restrain  that  which, 
from  its  nature,  should  be  under  the  control  of  the  one  authority, 
and  be  free  from  restriction,  save  as  it  is  governed  in  the  manner 
that  the  national  legislature  constitutionally  ordains. 

Thus,  the  States  cannot  tax  interstate  commerce,  either  by  laying 
the  tax  upon  the  business  which  constitutes  such  commerce  or  the 
privilege  of  engaging  in  it,  or  upon  the  receipts,  as  such,  derived 
from  it.  (State  Freight  Tax  Case,  15  Wall.  232.) 

They  have  no  power  to  prohibit  interstate  trade  in  legitimate 
articles  of  commerce  (Bowman  v.  Chicago  &  N.  W.  R.  Co.  125  U. 
S.  465,  481,  485),  or  to  prescribe  the  rates  to  be  charged  for 
transportation  from  one  State  to  another,  or  to  subject  the  opera- 
tions of  carriers  in  the  course  of  such  transportation  to  require- 
ments that  are  unreasonable  or  pass  beyond  the  bounds  of  suitable 
local  protection  (Wabash,  St.  L.  &  P.  R.  Co.  v.  Illinois,  118  U.  S. 
557,  577). 

But  within  these  limitations  there  necessarily  remains  to  the 
States  until  Congress  acts,  a  wide  range  for  the  permissible  exercise 
of  power  appropriate  to  their  territorial  jurisdiction,  although  inter- 
state commerce  may  be  affected.  It  extends  to  those  matters  of 
a  local  nature  as  to  which  it  is  impossible  to  derive  from  the  con- 
stitutional grant  an  intention  that  they  should  go  uncontrolled  pend- 
ing Federal  intervention.  Thus,  there  are  certain  subjects  having 
the  most  obvious  and  direct  relation  to  interstate  commerce,  which 
nevertheless,  with  the  acquiescence  of  Congress,  have  been  con- 
trolled by  State  legislation  from  the  foundation  of  the  government 
because  of  the  necessity  that  they  should  not  remain  unregulated, 
and  that  their  regulation  should  be  adapted  to  varying  local  exigen- 
cies ;  hence,  the  absence  of  regulation  by  Congress  in  such  matters 
has  not  imported  that  there  should  be  no  restriction,  but  rather 
that  the  States  should  continue  to  supply  the  needed  rules  until  Con- 
gress should  decide  to  supersede  them.  Further,  it  is  competent 
for  a  State  to  govern  its  internal  commerce,  to  provide  local  im- 
provements, to  create  and  regulate  local  facilities,  to  adopt  protective 
measures  of  a  reasonable  character  in  the  interest  of  the  health, 
safety,  morals,  and  welfare  of  its  people,  although  interstate  com- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  215 

merce  may  incidentally  or  indirectly  be  involved.  Our  system  of 
government  is  a  practical  adjustment  by  which  the  national  authority 
as  conferred  by  the  Constitution  is  maintained  in  its  full  scope 
without  unnecessary  loss  of  local  efficiency.  Where  the  subject  is 
peculiarly  one  of  local  concern,  and  from  its  nature  belongs  to  the 
class  with  which  the  State  appropriately  deals  in  making  reasonable 
provision  for  local  needs,  it  cannot  be  regarded  as  left  to  the  unre- 
strained will  of  individuals  because  Congress  has  not  acted,  although 
it  may  have  such  a  relation  to  interstate  commerce  as  to  be  within 
the  reach  of  the  Federal  power.  In  such  case  Congress  must  be 
the  judge  of  the  necessity  of  Federal  action.  Its  paramount  author- 
ity always  enables  it  to  intervene  at  its  discretion  for  the  complete 
and  effective  government  of  that  which  has  been  committed  to  its 
care,  and,  for  this  purpose  and  to  this  extent,  in  response  to  a 
conviction  of  national  need,  to  displace  local  laws  by  substituting 
laws  of  its  own.  The  successful  working  of  our  constitutional 
system  has  thus  been  made  possible.  *  *  *  * 

(The  court  gives  illustrations  of  State  pilotage  laws,  harbor 
regulations,  quarantine  and  inspection  laws  which  have  been  sus- 
tained.) 

And  whenever,  as  to  such  matters,  under  these  established  prin- 
ciples, Congress  may  be  entitled  to  act,  by  virtue  of  its  power  to 
secure  the  complete  government  of  interstate  commerce,  the  State 
power  nevertheless  continues  until  Congress  does  act  and  by  its 
valid  interposition  limits  the  exercise  of  the  local  authority. 

(2)  These  principles  apply  to  the  authority  of  the  State  to 
prescribe  reasonable  maximum  rates  for  intrastate  transportation. 

State  regulation  of  railroad  rates  began  with  railroad  transporta- 
tion. The  railroads  were  chartered  by  the  States,  and  from  the 
outset,  in  many  charters,  maximum  rates  for  freight  or  passengers, 
or  both,  were  prescribed.  Frequently — and  this  became  the  more 
general  practice — the  Board  of  Directors  was  permitted  to  fix 
charges  in  its  discretion, — an  authority  which,  in  numerous  in- 
stances, was  made  subject  to  a  limitation  upon  the  amount  of  net 
earnings.  In  several  States  maximum  rates  were  also  established, 
or  the  power  to  alter  rates  was  expressly  reserved,  by  general  laws. 
In  1853,  the  State  of  New  York  fixed  the  maximum  fare  for  way 
passengers  on  the  railroads  forming  the  line  of  the  New  York  Cen- 
tral at  2  cents  a  mile  (Laws  of  1853,  chap.  76,  §  7),  and  this  rate 
extending  to  Buffalo  and  Suspension  Bridge,  on  the  boundary  of 
the  State,  has  continued  to  the  present  day  (Consol.  Laws  [N.  Y.], 
chap.  49,  §  57).  As  a  rule  the  restrictions  imposed  by  the  early 
legislation  were  far  from  onerous,  but  they  are  significant  in  the 
assertion  of  the  right  of  control.  More  potent  than  these  provisions, 
in  the  actual  effect  upon  railroad  tariffs,  was  the  State  canal.  It 
is  a  matter  of  common  knowledge  that  the  traffic  on  the  trunk  lines 
from  the  Atlantic  seaboard  to  the  West  was  developed  in  competi- 
tion with  the  Erie  Canal,  built,  maintained,  and  regulated  by  the 
State  of  New  York  to  promote  its  commerce.  *  *  *  * 


216  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

The  doctrine  was  thus  fully  established  that  the  State  could  not 
prescribe  interstate  rates,  but  could  fix  reasonable  intrastate  rates 
throughout  its  territory. 

Second.     Are  the  State's  acts  and  orders  confiscatoryf 

The  rate-making  power  is  a  legislative  power  and  necessarily  im- 
plies a  range  of  legislative  discretion.  We  do  not  sit  as  a  board  of 
revision  to  substitute  our  judgment  for  that  of  the  legislature,  or 
of  the  commission  lawfully  constituted  by  it,  as  to  matters  within 
the  province  of  either.  San  Diego  Land  &  Town  Co.  v.  Jasper,  189 
U.  S.  439,  446,  47  L.  ed.  892,  896,  23  Sup.  Ct.  Rep,  571.  The  case 
falls  within  a  well-defined  category.  Here  we  have  a  general 
schedule  of  rates,  involving  the  profitableness  of  the  intrastate  oper- 
ations of  the  carrier,  taken  as  a  whole,  and  the  inquiry  is  whether 
the  State  has  overstepped  the  constitutional  limit  by  making  the 
rates  so  unreasonably  low  that 'the  carriers  are  deprived  of  their 
property  without  due  process  of  law,  and  denied  the  equal  protection 
of  the  laws. 

The  property  of  the  railroad  corporation  has  been  devoted  to  a 
public  use.  There  is  always  the  obligation  springing  from  the 
nature  of  the  business  in  which  it  is  engaged — which  private  exi- 
gency may  not  be  permitted  to  ignore — that  there  shall  not  be  an 
exorbitant  charge  for  the  service  rendered.  But  the  State  has  not 
seen  fit  to  undertake  the  service  itself ;  and  the  private  property 
embarked  in  it  is  not  placed  at  the  mercy  of  legislative  caprice. 
It  rests  secure  under  the  constitutional  protection  which  extends 
not  merely  to  the  title,  but  to  the  right  to  receive  just  compensation 
for  the  service  given  to  the  public.  Stone  v.  Farmers'  Loan  &  T. 
Co.  116  U.  S.  307. 

In  determining  whether  that  right  has  been  denied,  each  case 
must  rest  upon  its  special  facts.  But  the  general  principles  which 
are  applicable  in  a  case  of  this  character  have  been  set  forth  in  the 
•decisions. 

(1)  The  basis  of  calculation  is  the  "fair  value  of  the  property" 
used  for  the  convenience  of  the  public. 

(2)  The  ascertainment  of  that  value  is  not  controlled  by  arti- 
ficial rules.     It  is  not  a  matter  of  formulas,  but  there  must  be  a 
reasonable  judgment,  having  its  basis  in  a  proper  consideration  of 
all   relevant   facts.     The   scope   of   the   inquiry   was   thus   broadly 
described  in  Smyth,   v.    Ames    (169    U.    S.    pp.    546,    547):     "In  order 
to  ascertain  that  value,  the  original  cost  of  construction,  the  amount 
expended  in  permanent  improvements,  the  amount  and  market  value 
of  its  bonds  and  stock,  the  present,  as  compared  with  the  original, 
cost  of  construction,  the  probable  earning  capacity  of  the  property 
under  particular  rates  prescribed  by  statute,  and  the  sum  required 
to  meet  operating  expenses,  are  all  matters  for  consideration,  and 
are  to  be  given  such  weight  as  may  be  just  and  right  in  each  case. 
We  do  not  say  that  there  may  not  be  other  matters  to  be  regarded 
in  estimating  the  value  of  the  property.     What  the  company  is  en- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  217 

titled  to  ask  is  a  fair  return  upon  the  value  of  that  which  it  employs 
for  the  public  convenience.  On  the  other  hand,  what  the  public  is 
entitled  to  demand  is  that  no  more  be  exacted  from  it  for  the  use 
of  a  public  highway  than  the  services  rendered  by  it  are  .reasonably 
worth." 

(3)  Where  the  business  of  the  carrier  is  both  interstate  and 
intrastate,  the  question  whether  a  scheme  of  maximum  rates  fixed 
by  the  State  for  intrastate  transportation  affords  a  fair  return  must 
be  determined  by  considering  separately  the  value  of  the  property 
employed  in  the  intrastate  business  and  the  compensation  allowed 
in  that  business  under  the  rates  prescribed.  This  was  also  ruled 
in  the  Smyth  Case  (id.  p.  541).  The  reason,  as  there  stated,  is 
that  the  State  cannot  justify  unreasonably  low  rates  for  domestic 
transportation,  considered  alone,  upon  the  ground  that  the  carrier 
is  earning  large  profits  on  its  interstate  business,  and,  on  the  other 
hand,  the  carrier  cannot  justify  unreasonably  high  rates  on  domestic 
business  because  only  in  that  way  is  it  able  to  meet  losses  on  its 
interstate  business;  *  *  *  * 

Our  conclusions  may  be  briefly  stated.  The  statements  of  the 
complainants'  witnesses  as  to  the  extra  cost  of  interstate  business, 
while  entitled  to  respect  as  expressions  of  opinion,  manifestly  in- 
volve wide  and  difficult  generalizations.  They  embrace,  without  the 
aid  of  statistical  information  derived  from  appropriate  tests  and 
submitted  to  careful  analysis,  a  general  estimate  of  all  the  condi- 
tions of  transportation,  and  an  effort  to  express  in  the  terms  of  a 
definite  relation,  or  ratio,  what  clearly  could  be  accurately  arrived 
at  only  by  prolonged  and  minute  investigation  of  particular  facts 
with  respect  to  the  actual  traffic  as  it  was  being  carried  over  the 
line.  The  extra  cost,  as  estimated  by  these  witnesses,  is  predicated 
not  simply  of  haulage  charges,  but  of  all  the  outlays  of  the  freight 
service,  including  the  share  of  the  expenses  for  maintenance  of  way 
and  equipment  assigned  to  the  freight  department.  And  the  ratio, 
to  be  accurately  stated,  must  also  express  the  results  of  a  suitable 
discrimination  between  the  interstate  and  intrastate  traffic  on 
through  and  local  trains  respectively,  and  of  an  attribution  of  the 
proper  share  of  the  extra  cost  of  local  train  service  to  the  interstate 
traffic  that  uses  it.  The  wide  range  of  the  estimates  of  extra  cost, 
from  three  to  six  or  seven  times  that  of  the  interstate  business  per 
ton  mile,  shows  both  the  difficulty  and  the  lack  of  certainty  in  pass- 
ing judgment. 

We  are  of  opinion  that,  on  an  issue  of  this  character,  involving 
the  constitutional  validity  of  State  action,  general  estimates  of  the 
sort  here  submitted,  with  respect  to  a  subject  so  intricate  and  im- 
portant, should  not  be  accepted  as  adequate  proof  to  sustain  a 
finding  of  confiscation.  While  accounts  have  not  been  kept  so  as 
to  show  the  relative  cost  of  interstate  and  intrastate  business,  giving 
particulars  of  the  traffic  handled  on  through  and  local  trains,  and 
presenting  data  from  which  such  extra  cost  as  there  may  be,  of  in- 
trastate business,  may  be  suitably  determined,  it  would  appear  to 
have  been  not  impracticable  to  have  had  such  accounts  kept  or 


218  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

statistics  .prepared,  at  least  during  test  periods,  properly  selected. 
It  may  be  said  that  this  would  have  been  a  very  difficult  matter,  but 
the  company,  having  assailed  the  constitutionality  of  the  State  acts 
and  orders,  was  bound  to  establish  its  case,  and  it  was  not  entitled 
to  rest  on  expressions  of  judgment  when  it  had  it  in  its  power  to 
present  accurate  data  which  would  permit  the  court  to  draw  the 
right  conclusion. 

We  need  not  separately  review  the  findings  with  respect  to  the 
division  of  passenger  expenses,  as  the  same  considerations  are 
involved,  with  the  distinction,  however,  that  the  extra  cost  attributed 
to  the  intrastate  business  is  relatively  small  as  compared  with  that 
charged  to  intrastate  freight.  And,  in  view  of  the  conclusions 
reached  on  the  controlling  questions  we  have  considered,  we  express 
no  opinion  with  respect  to  the  method  adopted  in  dividing  expenses 
between  the  passenger  and  freight  departments. 

For  the  purpose  of  determining  whether  the  rates  permit  a  fair 
return,  the  results  of  the  entire  intrastate  business  must  be  taken 
into  account.  During  the  test  year  the  entire  revenue,  as  found, 
from  the  intrastate  business,  passenger  and  freight,  amounted  to 
$2,897,912.26.  All  the  rates  in  question  were  in  force  save  the 
commodity  rates,  and  it  is  further  found  that  the  loss  that  would 
have  accrued  in  intrastate  commodity  business,  by  the  application  of 
the  commodity  rates  which  were  under  injunction,  would  have 
amounted  to  $21,493.67. 

As  neither  the  share  of  the  expenses  properly  attributable  to  the 
intrastate  business,  nor  the  value  of  the  property  employed  in  it, 
was  satisfactorily  shown,  and  hence  it  did  not  appear  upon  the  facts 
proved  that  a  fair  return  had  been  denied  to  the  company,  we  are 
of  the  opinion  that  the  complainant  failed  to  sustain  his  bill. 

(The  decrees  of  the  court  below  enjoining  the  enforcement  of 
the  intrastate  rates  of  interstate  carriers  as  fixed  by  the  State  were 
reversed  in  two  of  the  cases  and  modified  in  the  third  case.) 


HOUSTON,  EAST  AND  WEST  TEXAS   RAILWAY  COM- 
PANY v.  UNITED  STATES,  THE  INTERSTATE  COM- 
MERCE COMMISSION,  ET  AL. 

(THE  SHREVEPORT  CASE.) 
234  U.  S.  342. 

A  complaint  was  filed  with  the  Interstate  Commerce  Commission 
that  the  Houston,  East  and  West  Texas  Railway  Company  and  the 
Texas  &  Pacific  Railway  Company  maintained  unreasonable  rates 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  219 

as  interstate  carriers  from  Shreveport,  Louisiana,  to  various  points 
in  Texas,  and  unjustly  discriminated  in  favor  of  traffic  within  the 
State  of  Texas  and  against  similar  traffic  between  Louisiana  and 
Texas.  The  basis  of  the  complaint  was  that  the  carriers  made  rates 
out  of  Dallas  and  other  Texas  points  into  eastern  Texas  which  were 
much  lower  than  those  which  they  fixed  from  Shreveport  into 
Texas.  The  situation  may  be  thus  specifically  described:  Shreve- 
port, Louisiana,  is  about  40  miles  from  the  Texas  State  line,  and 
231  miles  from  Houston,  Texas,  on  the  line  of  the  Houston,  etc., 
Railway  Company:  it  is  189  miles  from  Dallas,  Texas,  on  the  line 
of  the  Texas  &  Pacific  Railway.  Shreveport  competes  with  both 
cities  for  the  trade  of  the  intervening  territory.  The  rates  on  these 
lines  from  Dallas  and  Houston,  respectively,  eastward  to  inter- 
mediate points  in  Texas  were  much  less,  according  to  distance,  than 
from  Shreveport  westward  to  the  same  points.  It  was  undisputed 
that  the  difference  was  substantial,  and  injuriously  affected  the 
commerce  of  Shreveport.  It  appeared,  for  example,  that  a  rate  of 
60  cents  carried  first-class  traffic  a  distance  of  160  miles  to  the 
eastward  from  Dallas,  while  the  same  rate  would  carry  the  same 
class  of  traffic  only  55  miles  westward  from  Shreveport  into  Texas. 

The  Interstate  Commerce  Commission  directed  the  carriers  to  de- 
sist from  charging  higher  rates  for  the  transportation  of  any  com- 
modity from  Shreveport  to  Dallas  and  Houston,  respectively,  and 
intermediate  points,  than  were  contemporaneously  charged  from 
Dallas  and  Houston  toward  Shreveport  for  equal  distances. 

The  carriers  petitioned  the  Commerce  Court  for  a  reversal  of 
the  order  made  by  the  Interstate  Commerce  Commission,  contend- 
ing that  Congress  (through  the  Commission)  had  no  power  to  con- 
trol the  intrastate  charges  of  an  interstate  carrier  even  to  the  extent 
necessary  to  prevent  injurious  discrimination  against  interstate 
traffic.  The  Commerce  Court  affirmed  the  order  of  the  Interstate 
Commerce  Commission. 

An  appeal  was  then  taken  to  the  Supreme  Court  of  the  United 
States. 

MR.  JUSTICE  HUGHES  delivered  the  opinion  of  the  Court: 

We  find  no  reason  to  doubt  that  Congress  is  entitled  to  keep  the 
highways  of  interstate  communication  open  to  interstate  traffic  upon 
fair  and  equal  terms.  That  an  unjust  discrimination  in  the  rates 
of  a  common  carrier,  by  which  one  person  or  locality  is  unduly  fa- 
vored as  against  another  under  substantially  similar  conditions  of 
traffic,  constitutes  an  evil,  is  undeniable ;  and  where  this  evil  consists 
in  the  action  of  an  interstate  carrier  in  unreasonably  discriminating 
against  interstate  traffic  over  its  line,  the  authority  of  Congress  to 
prevent  it  is  equally  clear.  It  is  immaterial,  so  far  as  the  protecting 
power  of  Congress  is  concerned,  that  the  discrimination  arises  from 
intrastate  rates  as  compared  with  interstate  rates.  The  use  of  the 
instrument  of  interstate  commerce  in  a  discriminatory  manner  so 


220  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

as  to  inflict  injury  upon  that  commerce,  or  some  part  thereof,  fur- 
nishes abundant  ground  for  Federal  intervention.  Nor  can  the  at- 
tempted exercise  of  State  authority  alter  the  matter,  where  Con- 
gress has  acted,  for  a  State  may  not  authorize  the  carrier  to  do  that 
which  Congress  is  entitled  to  forbid  and  has  forbidden. 

It  is  to  be  noted — as  the  government  has  well  said  in  its  argu- 
ment in  support  of  the  Commission's  order — that  the  power  to  deal 
with  the  relations  between  the  two  kinds  of  rates,  as  a  relation,  lies 
exclusively  with  Congress.  It  is  manifest  that  the  State  cannot  fix 
the  relation  of  the  carrier's  interstate  and  intrastate  charges  without 
directly  interfering  with  the  former,  unless  it  simply  follows  the 
standard  set  by  Federal  authority.  This  question  was  presented 
with  respect  to  the  long  and  short  haul  provision  of  the  Kentucky 
Constitution,  adopted  in  1891,  which  the  court  had  before  it  in 
Louisville  &  N.  R.  Co.  v.  Eubank,  184  U.  S.  27.  The  State  court 
had  construed  this  provision  as  embracing  a  long  haul,  from  a  place 
outside  to  one  within  the  State,  and  a  shorter  haul  on  the  same  line 
and  in  the  same  direction  between  points  within  the  State.  This 
court  held  that,  so  construed,  the  provision  was  invalid  as  being  ? 
regulation  of  interstate  commerce  because  "it  linked  the  interstate 
rate  to  the  rate  for  the  shorter  haul,  and  thus  the  interstate  charge 
was  directly  controlled  by  the  State  law."  (See  230  U.  S.  pp.  428, 
429.)  It  is  for  Congress  to  supply  the  needed  correction  where  the 
relation  between  intrastate  and  interstate  rates  presents  the  evil  to  be 
corrected,  and  this  it  may  do  completely,  by  reason  of  its  control 
over  the  interstate  carrier  in  all  matters  having  such  a  close  and 
substantial  relation  to  interstate  commerce  that  it  is  necessary  or 
appropriate  to  exercise  the  control  for  the  effective  government  of 
that  commerce. 

It  is  also  clear  that,  in  removing  the  injurious  discriminations 
against  interstate  traffic  arising  from  the  relation  of  intrastate  to 
interstate  rates,  Congress  is  not  bound  to  reduce  the  latter  below 
what  it  may  deem  to  oe  a  proper  standard,  fair  to  the  carrier  and 
to  the  public.  Otherwise,  it  could  prevent  the  injury  to  interstate 
commerce  only  by  the  sacrifice  of  its  judgment  as  to  interstate  rates. 
Congress  is  entitled  to  maintain  its  own  standard  as  to  these  rates, 
and  to  forbid  any  discriminatory  action  by  interstate  carriers  which 
will  obstruct  the  freedom  of  movement  of  interstate  traffic  over 
their  lines  in  accordance  with  the  terms  it  establishes. 

Having  this  power,  Congress  could  provide  for  its  execution 
through  the  aid  of  a  subordinate  body;  and  we  conclude  that  the 
order  of  the  Commission  now  in  question  cannot  be  held  invalid  upon 
the  ground  that  it  exceeded  the  authority  which  Congress  could  law- 
fully confer. 

The  Decree  of  the  Commerce  Court  is  affirmed. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  221 

Section  3. 
POWER  OF  CONGRESS  OVER  THE  CURRENCY. 

THE  LEGAL  TENDER  CASES. 
HEPBURN  v.  GRISWOLD. 

8  WALLACE,  603.     1869. 

In  this  case  a  certain  Mrs.  Hepburn  made  a  promissory  note, 
dated  June  20,  1860,  by  which  she  promised  to  pay  to  one  Henry 
Griswold  on  February  20,  1862,  the  sum  of  $11,250.  There  was  at 
the  time  the  note  was  made,  and  at  the  time  it  fell  due  no  lawful 
money  of  the  United  States  but  gold  and  silver  coin.  The  note  was 
not  paid  at  maturity.  On  February  25,  1862,  in  a  crisis  of  the  na- 
tion, Congress  authorized  the  issue  of  $150,000,000  of  its  own 
notes  and  enacted  in  regards  to  them  "Such  notes  *  *  *  shall  also  be 
lawful  money  and  a  legal  tender  in  payment  of  all  debts,  public  and 
private,  within  the  United  States,  except  duties  on  imports,  etc." 
These  notes  were  issued  on  the  credit  of  the  United  States  alone. 
In  March,  1864,  suit  was  brought  upon  the  note.  Mrs.  Hepburn 
tendered  the  United  States  notes  issued  under  the  act  in  satisfaction 
and  payment  of  Griswold's  claim.  The  tender  was  refused,  and 
the  money  paid  into  court.  On  appeal  from  the  State  courts,  the 
cause  was  brought  into  the  United  States  Supreme  Court. 

CHIEF  JUSTICE  CHASE  delivered  the  opinion  of  the  court : 

Applying  the  rule  just  stated  (i.  e.,  that  statutes  shall  be  con- 
strued so  as  not  to  be  unjust  and  inequitable,  if  another  sense,  con- 
sonant with  those  principles  can  be  given  to  them),  there  appears 
to  be  strong  reason  for  construing  the  word  "debts"  as  having 
reference  only  to  debts  contracted  subsequent  to  the  enactment  of 
the  law.  For  no  one  will  question  that  the  United  States  notes, 
which  the  act  makes  a  legal  tender  in  payment,  are  essentially  unlike 
in  nature,  and  being  irredeemable  in  coin,  are  necessarily  unlike  in 
value,  to  the  lawful  money  intended  by  parties  to  contracts  for  the 
payment  of  money  made  before  its  passage.  *  *  *  Contracts  for  the 
payment  of  money,  made  before  the  act  of  1862,  had  reference  to 
coined  money,  and  could  not  be  discharged,  unless  by  consent, 
otherwise  than  by  tender  of  the  sum  due  in  coin.  Every  such  con- 
tract, therefore,  was  in  legal  import,  a  contract  for  the  payment  of 
coin.  (The  court  discusses  the  question  whether  Congress  has 
power  to  make  notes  issued  under  its  authority  a  legal  tender  in 
payment  of  debts,  which,  when  contracted,  were  payable  in  gold  and 
silver  coin,  and  concludes  the  opinion  as  follows:)  *  *  *  We  are 
obliged  to  conclude  that  an  act  making  mere  promises  to  pay  dollars 
a  legal  tender  in  payment  of  debts  previously  contracted,  is  not  a 


222  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

means  appropriate,  plainly  adapted,  really  calculated  to  carry  into 
effect  any  express  power  vested  in  Congress;  that  such  an  act  is 
inconsistent  with  the  spirit  of  the  Constitution;  and  that  it  is  pro- 
hibited by  the  Constitution.  We  are  obliged,  therefore,  to  hold 
that  the  defendant  (Griswold)  was  not  bound  to  receive  from  the 
plaintiff  the  currency  tendered  to  him  in  payment  of  the  note,  made 
before  the  passage  of  the  act  of  February  25,  1862. 


KNOX  v.  LEE. 

PARKER  v.  DAVIS. 

12  Wallace,  79  U.  S.,  457.     1871. 

In  the  case  of  Knox  v.  Lee,  a  suit  was  brought  in  the  Circuit 
Court  of  the  United  States  for  the  Western  District  of  Texas  by 
Lee  to  recover  the  value  of  certain  sheep,  which  Knox  had  pur- 
chased at  a  confiscation  sale  held  under  the  authority  of  the  so- 
called  Confederate  States.  Upon  the  trial  of  the  case  the  judge 
charged  the  jury  as  follows :  "It  appears  from  the  evidence  that 
these  sheep  were  confiscated  as  the  property  of  an  alien  enemy, 
and  sold  under  the  authority  of  the  so-called  Confedate  Govern- 
ment, March  7,  1863,  and  the  defendant  Knox,  in  connection  with 
others,  perhaps,  became  the  purchaser  thereof.  I  have  to  say  to 
the  jury  that  such  sale  conferred  no  title  whatsoever  upon  the 
purchaser  or  upon  any  one  knowing  that  title  was  derived  from  this 
source."  The  plaintiff  Lee  during  the  trial,  offered  to  prove  the 
difference  in  value  between  specie  (gold  and  silver)  and  United 
States  currency  generally  known  as  greenbacks,  for  the  purpose 
of  showing  that  gold  and  silver  had  a  greater  value  than  green- 
backs, and  for  the  purpose  of  allowing  the  jury  to  estimate  the 
difference  between  the  two.  The  defendant  Knox  objected  to  this 
testimony  on  the  ground  that  United  States  currency  was  made  legal 
tender  by  law,  and  there  was  no  difference  in  value  between  the 
two  in  law.  The  court  sustained  the  objection  and  excluded  all 
such  evidence,  saying  to  the  jury: 

"In  assessing  damages,  the  jury  will  recollect  that  whatever 
amount  they  may  give  by  their  verdict  can  be  discharged  by  the 
payment  of  such  amount  in  legal  tender  notes  of  the  United  States." 
Judgment  having  been  given  for  the  plaintiff,  the  defendant  Knox 
sued  out  this  writ  of  error  to  the  Supreme  Court. 

The  case  of  Parker  v.  Davis  arose  in  the  Supreme  Judicial  Court 
of  Massachusetts,  upon  a  bill  in  equity  filed  by  Davis  to  compel 
Parker  to  perform  a  contract  to  convey  a  lot  of  woodland  upon 
the  payment  of  a  given  sum  of  money.  This  contract  was  dated  and 
the  suit  brought  upon  it  prior  to  the  passage  of  the  Act  of  Con- 
gress of  February  25,  1862,  which  provided  for  a  paper  currency. 
The  Supreme  Court  of  Massachusetts  decreed  that  Parker  should 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  223 

execute  to  Davis  a  deed  of  the  land  in  question,  upon  Davis'  paying 
into  court  the  consideration  money  mentioned  in  the  contract.  In 
pursuance  of  that  decree,  Davis  paid  the  said  sum  into  court  in 
legal  tender  or  treasury  notes  of  the  United  States.  The  defendant 
refused  to  execute  the  deed,  claiming  that  the  money  should  be 
paid  to  the  court  in  coin.  The  court  then  ordered  that  the  plaintiff 
Davis  should  pay  the  specified  amount  in  treasury  notes  of  the 
United  States.  From  this  order  the  defendant  Parker  sued  out  a 
writ  of  error  to  the  United  States  Supreme  Court. 

The  Supreme  Court  on  April  10,  1871,  ordered  that  the  two 
cases,  together  with  others  pending  upon  the  same  question,  be 
heard  upon  the  following  propositions :  / 

1.  Is  the  Act  of  Congress,  known  as  the  Legal  Tender  Act,  con- 
stitutional as  to  contracts  made  before  its  passage. 

2.  Is  it  valid,  as  applicable  to  transactions  since  its  passage. 
MR.  JUSTICE  STRONG  delivered  the  opinion  of  the  court: 

The  controlling  questions  in  these  cases  are  the  following:  Afe 
the  Acts  of  Congress,  known  as  the  legal  tender  acts,  consti- 
tutional when  applied  to  contracts  made  before  their  passage?  And, 
secondly,  are  they  valid  as  applicable  to  debts  contracted  since  their 
enactment?  These  questions  have  been  elaborately  argued,  and 
they  have  received  from  the  court  that  consideration  which  their 
great  importance  demands.  It  would  be  difficult  to  overestimate  the 
consequences  which  must  follow  our  decision.  They  will  effect  the 
entire  business  of  the  country,  and  take  hold  of  the  possible  con- 
tinued existence  of  the  government.  If  it  be  held  by  this  court  that 
Congress  has  no  constitutional  power,  under  any  circumstances,  or 
in  any  emergency,  to  make  treasury  notes  a  legal  tender  for  the 
payment  of  all  debts  (a  power  confessedly  possessed  by  every  in- 
dependent sovereignty  other  than  the  United  States)  the  government 
is  without  those  means  of  self-preservation  which,  all  must  admit, 
may,  in  certain  contingencies,  become  indispensable,  even  if  they 
were  not  when  the  Acts  of  Congress  now  called  in  question  were 
enacted.  It  is  also  clear  that  if  we  hold  the  acts  invalid  as  applicable 
to  debts  incurred,  or  transactions  which  have  taken  place  since  their 
enactment,  our  decision  must  cause,  throughout  the  country,  great 
business  derangement,  wide-spread  distress  and  the  rankest  in- 
justice. The  debts  which  have  been  contracted  since  February  25, 
1862,  constitute,  doubtless,  by  far  the  greatest  portion  of  the  exist- 
ing indebtedness  of  the  country.  They  have  been  contracted  in 
view  of  the  Acts  of  Congress  declaring  treasury  notes  a  legal  tender, 
and  in  reliance  upon  that  declaration.  Men  have  bought  and  sold, 
borrowed  and  lent  and  assumed  every  variety  of  obligations  con- 
templating that  payment  might  be  made  with  such  notes.  Indeed 
legal  tender  treasury  notes  have  become  the  universal  measure  of 
values.  If  now,  by  our  decision  it  be  established  that  these  debts 
and  obligations  can  be  discharged  only  by  gold  coin ;  if,  contrary  to 
the  expectation  of  all  parties  to  these  contracts,  legal  tender  notes 


224  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

are  rendered  unavailable,  the  government  has  become  an  instru- 
ment of  the  grossest  injustice;  all  debtors  are  loaded  with  an  ob- 
ligation it  was  never  contemplated  they  should  assume,  a  large  per- 
centage is  added  to  every  debt  and  such  must  become  the  demand 
for  gold  to  satisfy  contracts  that  ruinous  sacrifices,  general  distress 
and  bankruptcy  may  be  expected.  These  consequences  are  too  ob- 
vious to  admit  of  question.  *  *  *  * 

The  consequences  of  which  we  have  spoken,  serious  as  they  are, 
must  be  accepted,  if  there  is  a  clear  incompatibility  between  the 
Constitution  and  the  Legal  Tender  Acts.  But  we  are  unwilling 
to  precipitate  them  upon  the  country  unless  such  an  incompati- 
bility plainly  appears.  A  decent  respect  of  a  co-ordinate  branch 
of  the  government  demands  that  the  judiciary  should  presume,  until 
the  contrary  is  clearly  shown,  that  there  has  been  no  transgression 
of  power  by  Congress — all  the  members  of  which  act  under  the 
obligation  of  an  oath  of  fidelity  to  the  Constitution.  Such  has  always 
been  the  rule.  In  Commonwealth  v.  Smith,  4  Binn.  123,  the  lan- 
guage of  the  court  was,  "It  must  be  remembered  that,  for  weighty 
reasons,  it  has  been  assumed  as  a  principle,  in  construing  constitu- 
tions by  the  Supreme  Court  of  the  United  States,  by  this  court, 
and  by  every  other  court  of  reputation  in  the  United  States  that 
an  Act  of  the  Legislature  is  not  to  be  declared  void  unless  the 
violation  of  the  Constitution  is  so  manifest  as  to  leave  no  room  for 
reasonable  doubt."  *  *  *  * 

With  these  rules  of  constitutional  construction  before  us  settled 
at  an  early  period  in  the  history  of  the  government,  hitherto  uni- 
versally accepted,  and  not  even  now  doubted,  we  have  a  safe  guide 
to  a  right  decision  of  the  questions  before  us.  Before  we  can  hold 
the  legal  tender  acts  unconstitutional,  we  must  be  convinced  that 
they  were  not  appropriate  means,  or  means  conducive  to  the  execu- 
tion of  any  or  all  of  the  powers  of  Congress,  or  of  the  government, 
not  appropriate  in  any  degree  (for  we  are  not  judges  of  the  degree 
of  appropriateness)  or  we  must  hold  that  they  were  prohibited. 
This  brings  to  the  inquiry  whether  they  were,  when  enacted,  appro- 
priate instrumentalities  for  carrying  into  effect,  or  executing  any 
of  the  known  powers  of  Congress  or  of  any  department  of  the  gov- 
ernment. Plainly  to  this  inquiry,  a  consideration  of  the  time  when 
they  were  enacted,  and  of  the  circumstances  in  which  the  govern- 
ment then  stood,  is  important.  It  is  not  to  be  denied  that  acts  may 
be  adapted  to  the  exercise  of  lawful  power,  and  appropriate  to  it, 
in  seasons  of  exigency,  which  would  be  inappropriate  at  other 
times. 

We  do  not  propose  to  dilate  at  length  upon  the  circumstances  in 
which  the  country  was  placed  when  Congress  attempted  to  make 
treasury  notes  a  legal  tender.  They  are  of  too  recent  occurrence 
to  justify  enlarged  description.  Suffice  it  to  say  that  a  civil  war  was 
then  raging  which  seriously  threatened  the  overthrow  of  the  gov- 
ernment and  the  destruction  of  the  Constitution  itself.  It  demanded 
the  equipment  and  support  of  large  armies  and  navies,  and  the  em- 
ployment of  money  to  an  extent  beyond  the  capacity  of  all  ordinary 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW,  225 

sources  of  supply.  Meanwhile  the  public  treasury  was  nearly  empty, 
and  the  credit  of  the  government,  if  not  stretched  to  its  utmost  ten- 
sion had  become  nearly  exhausted.  Moneyed  institutions  had  ad- 
vanced largely  of  their  means,  and  more  could  not  be  expected  of 
them.  They  had  been  compelled  to  suspend  specie  payments.  Tax- 
ation was  inadequate  to  pay  even  the  interest  on  the  debt  already 
incurred,  and  it  was  impossible  to  await  the  income  of  additional 
taxes.  The  necessity  was  immediate  and  pressing.  The  army  was 
unpaid.  There  was  then  due  to  the  soldiers  in  the  field  nearly  a 
score  of  millions  of  dollars.  The  requisitions  from  the  War  and 
Navy  Departments  for  supplies  exceeded  fifty  millions  and  the 
current  expenditure  was  over  one  million  per  day.  The  entire 
amount  of  coin  in  the  country,  including  that  in  private  hands,  as 
well  as  that  in  banking  institutions  was  insufficient  to  supply  the 
need  of  the  government  for  three  months,  had  it  all  been  poured  into 
the  treasury.  Foreign  credit  we  had  none.  We  say  nothing  of  the 
overhanging  paralysis  of  trade  and  of  business  generally,  which 
threatened  loss  of  confidence  in  the  ability  of  the  government  to 
maintain  its  continued  existence,  and  therewith  the  complete  destruc- 
tion of  all  remaining  national  credit. 

It  was  at  such  a  time  and  in  such  circumstances  that  Congress 
was  called  upon  to  devise  means  for  maintaining  the  army  and 
navy,  for  securing  the  large  supplies  of  money  needed  and,  indeed, 
for  the  preservation  of  the  government  created  by  the  Constitution.  It 
was  at  such  a  time  and  in  such  an  emergency  that  the  Legal  Tender 
Acts  were  passed.  Now,  if  it  were  certain  that  nothing  else  would 
have  supplied  the  absolute  necessities  of  the  Treasury,  that  nothing 
else  would  have  enabled  the  government  to  maintain  its  armies  and 
navy,  that  nothing  else  would  have  saved  the  government  and  the 
Constitution  from  destruction,  while  the  Legal  Tender  Acts  would, 
could  any  one  be  bold  enough  to  assert  that  Congress  transgressed  its 
powers  ?  If  these  enactments  did  work  these  results,  can  it  be  main- 
tained now  that  they  were  not  for  a  legitimate  end,  or  "appropriate 
and  adapted  to  that  end,"  in  the  language  of  Chief  Justice  Marshall  ? 
That  they  did  work  such  results  is  not  to  be  doubted.  Something 
revived  the  drooping  faith  of  the  people;  something  brought  imme- 
diately to  the  government's  aid  the  resources  of  the  nation  and 
something  enabled  the  successful  prosecution  of  the  war,  and  the 
preservation  of  the  national  life.  What  was  it,  if  not  the  legal  tender 
enactments  ? 

But  if  it  be  conceded  that  some  other  means  might  have  been 
chosen  for  the  accomplishment  of  these  legitimate  and  necessary 
ends,  the  concession  does  not  weaken  the  argument.  It  is  urged 
now,  after  the  lapse  of  nine  years,  and  when  the  emergency  has 
passed  that  treasury  notes  without  the  legal  tender  clause  might 
have  been  issued  and  that  the  necessities  of  the  government  might 
thus  have  been  supplied.  Hence  it  is  inferred  that  there  was  no 
necessity  for  giving  to  the  notes  issued  the  capability  of  paying 
private  debts.  At  best  this  is  a  mere  conjecture.  But,  admitting 
it  to  be  true,  what  does  it  prove  ?  Nothing  more  than  that  Congress 


226  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

had  the  choice  of  .means  for  a  legitimate  end,  each  appropriate,  and 
adapted  to  that  end,  though,  perhaps  in  different  degrees.  What 
then?  Can  this  court  say  that  it  ought  to  have  adopted  one  rather 
than  the  other  ?  Is  it  our  province  to  decide  that  the  means  selected 
were  beyond  the  constitutional  power  of  Congress  because  we  may 
think  that  other  means  to  the  same  ends  would  have  been  more 
appropriate  and  equally  efficient?  That  would  be  to  assume  legis- 
lative power,  and  to  disregard  the  accepted  rules  for  construing  the 
constitution.  *  *  *  * 

It  is  plain  to  our  view,  however,  that  none  of  these  measures 
which  it  is  now  conjectured  might  have  been  substituted  for  the 
Legal  Tender  Acts  could  have  met  the  exigencies  of  the  case,  at 
the  time  when  those  acts  were  passed.  We  have  said  that  the  credit 
of  the  government  had  been  tried  to  its  utmost  endurance.  Every 
new  issue  of  notes  which  had  nothing  more  to  rest  upon  than  govern- 
ment credit,  must  have  paralyzed  it  more  and  more,  and  rendered 
it  increasingly  difficult  to  keep  the  army  in  the  field,  or  the  navy 
afloat.  It  is  an  historial  fact  that  many  persons  and  institutions  re- 
fused to  receive  and  pay  those  notes  which  had  been  issued,  and 
even  the  head  of  the  treasury  represented  to  Congress  the  necessity 
of  making  the  new  issues  legal  tenders,  or  rather,  declared  it  im- 
possible to  avoid  the  necessity.  The  vast  body  of  men  in  the  mili- 
tary service  was  composed  of  citizens  who  had  left  their  farms, 
their  workships,  and  their  business  with  families  and  debts  to  be  pro- 
vided for.  The  government  could  not  pay  them  with  ordinary  treas- 
ury notes,  nor  could  they  discharge  their  debts  with  such  a  cur- 
rency. Something  more  was  needed,  something  that  had  all  the  uses 
of  money.  And  as  no  one  could  be  compelled  to  take  common  treasury 
notes  in  payment  of  debts,  and  as  the  prospect  of  ultimate  redemp- 
tion was  remote  and  contingent,  it  is  not  too  much  to  say  that  they 
must  have  depreciated  in  the  market  long  before  the  war  closed, 
as  did  the  currency  of  the  Confederate  States.  Making  the  notes 
legal  tender  gave  them  a  new  use  and  it  needs  no  argument  to  show 
that  the  value  of  things  is  in  proportion  to  the  uses  to  which  they 
may  be  applied. 

Concluding,  then,  that  the  provision  which  made  treasury  notes 
a  legal  tender  for  the  payment  of  all  debts  other  than  those  ex- 
pressly excepted,  was  not  an  inappropriate  means  for  carrying  into 
execution  the  legitimate  powers  of  the  government,  we  proceed  to 
inquire  whether  it  was  forbidden  by  the  letter  or  spirit  of  the  Con- 
stitution. It  is  not  claimed  that  any  express  prohibition  exists, 
but  it  is  insisted  that  the  spirit  of  the  Constitution  was  violated  by 
the  enactment.  Here  those  who  assert  the  unconstitutionality  of 
the  acts  mainly  rest  their  argument.  They  claim  that  the  clause 
which  conferred  upon  Congress  power  "to  coin  money,  regulate 
the  value  thereof,  and  of  foreign  coin,"  contains  an  implication  that 
nothing  but  that  which  is  the  subject  of  coinage,  nothing  but  the 
precious  metals  can  ever  be  declared  by  law  to  be  money,  or  to 
have  the  uses  of  money.  If  by  this  is  meant  that  because  certain 
powers  over  the  currency  are  expressly  given  to  Congress  all  other 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  227 

powers  relating  to  the  same  subject  are  impliedly  forbidden,  we 
need  only  remark  that  such  is  not  the  manner  in  which  the  Consti- 
tution has  always  been  construed.  On  the  contrary,  it  has  been 
ruled  that  power  over  a  particular  subject  may  be  exercised  as 
auxiliary  to  an  express  power,  though  there  is  another  express 
power  relating  to  the  same  subject,  less  comprehensive.  *  *  *  * 
To  assert,  then,  that  the  clause  enabling  Congress  to  coin  money 
and  regulate  its  value  tacitly  implies  a  denial  of  all  other  power 
over  the  currency  of  the  nation,  is  an  attempt  to  introduce  a  new 
rule  of  construction  against  the  solemn  decisions  of  this  court.  So 
far  from  its  containing  a  lurking  prohibition,  many  have  thought 
it  was  intended  to  confer  upon  Congress  that  .general  power  over 
the  currency  which  has  always  been  an  acknowledged  attribute  of 
sovereignty  in  every  other  civilized  nation  than  our  own,  especially 
when  considered  in  connection  with  the  other  clause  which  denies 
to  the  States  the  power  to  coin  money,  emit  bills  of  credit,  or  make 
anything  but  gold  or  silver  coin  a  tender  in  payment  of  debts. 
We  do  not  assert  this  now,  but  there  are  some  considerations  touch- 
ing upon  these  clauses  which  tend  to  show  that  if  any  implications 
are  to  be  deduced  from  them,  they  are  of  an  enlarging  rather  than 
a  restraining  character.  The  Constitution  was  intended  to  frame 
a  government  as  distinguished  from  a  league  or  compact,  a  govern- 
ment supreme  in  some  particulars  over  States  and  people.  It  was 
designed  to  provide  the  same  currency,  having  a  uniform  legal 
value  in  all  the  States.  It  was  for  this  reason  the  power  to  coin 
money  and  regulate  its  value  was  conferred  upon  the  Federal  Gov- 
ernment, while  the  same  power  as  well  as  the  power  to  emit  bills 
of  credit  was  withdrawn  from  the  States.  The  States  can  no  longer 
declare  what  shall  be  money,  or  regulate  its  value.  Whatever  power 
there  is  over  the  currency  is  vested  in  Congress.  If  the  power  to 
declare  what  is  money  is  not  in  Congress,  it  is  annihilated.  *  *  *  * 
And  generally,  when  one  of  such  powers  was  expressly  denied  to 
the  States  only,  it  was  for  the  purpose  of  rendering  the  Federal 
power  more  complete  and  exclusive.  Why  then,  it  may  be  asked, 
if  the  design  was  to  prohibit  to  the  new  government,  as  well  as 
to  the  States,  that  general  power  over  the  currency,  which  the 
States  had  when  the  Constitution  was  framed  was  such  denial  not 
expressly  extended  to  the  new  government  as  it  was  to  the  States? 
In  view  of  this  it  might  be  argued  with  much  force  that  when  it 
is  considered  in  what  brief  and  comprehensive  terms  the  Constitu- 
tion speaks,  how  sensible  its  framers  must  have  been  that 
emergencies  might  arise  when  the  precious  metals  (then  more  scarce 
than  now)  might  prove  inadequate  to  the  necessities  of  the  govern- 
ment and  the  demands  of  the  people — when  it  is  remembered  that 
paper  money  was  almost  exclusively  in  use  in  the  States  as  the 
medium  of  exchange  and  when  the  great  evil  sought  to  be  remedied 
was  the  want  of  uniformity  in  the  current  value  of  money,  it  might 
be  argued,  we  say,  that  the  gift  of  power  to  coin  money  and  regulate 
the  value  thereof,  was  understood  as  conveying  general  power 
over  the  currency,  the  power  which  had  belonged  to  the  States,  and 


228  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

which  they  surrendered.  Such  a  construction,  it  might  be  said, 
would  be  in  close  analogy  to  the  mode  of  construing  other  sub- 
stantive powers  granted  to  Congress.  They  have  never  been  con- 
strued literally,  and  the  government  could  not  exist  if  they  were. 
Thus  the  power  to  carry  on  war  is  conferred  by  the  power  to 
"declare  war."  The  whole  system  of  the  transportation  of  the 
mails  is  built  upon  the  power  to  establish  post  offices  and  post 
roads.  The  power  to  regulate  commerce  extended  far  beyond  the 
letter  of  the  grant.  Even  the  advocates  of  a  strict  literal  construc- 
tion of  the  phrase  "to  coin  money  and  regulate  the  value  thereof," 
while  insisting  that  it  defines  the  material  to  be  coined  as  metal, 
are  compelled  to  concede  to  Congress  large  discretion  in  all  other 
particulars.  The  Constitution  does  not  ordain  what  metals  may 
be  coined  or  prescribe  that  the  legal  value  of  the  metals  when 
coined  shall  correspond  at  all  with  their  intrinsic  value  in  the 
market.  Nor  does  it  even  affirm  that  Congress  may  declare  any- 
thing to  be  a  legal  tender  for  the  payment  of  debts.  Confessedly 
the  power  to  regulate  the  value  of  money  coined  and  of  foreign 
coins  is  not  exhausted  by  the  first  regulation.  More  than  once  in 
our  history  has  the  regulation  been  changed  without  any  denial 
of  the  power  of  Congress  to  change  it,  and  it  seems  to  have  been 
left  to  Congress  to  determine  alike  what  metal  shall  be  coined,  its 
purity  and  how  far  its  statutory  value,  as  money,  shall  correspond 
from  time  to  time  with  the  market  value  of  the  same  metal  as 
bullion.  How,  then,  can  the  grant  of  a  power  to  coin  money  and 
regulate  its  value,  made  in  terms  so  liberal  and  unrestrained,  coupled 
also  with  a  denial  to  the  States  of  all  power  over  the  currency, 
be  regarded  as  an  implied  prohibition  to  Congress  against  declaring 
treasury  notes  a  legal  tender,  if  such  declaration  is  appropriate, 
and  adapted  to  carrying  into  execution  the  admitted  powers  of  the 
government. 

We  come  next  to  the  argument  much  used,  and  indeed  the  main 
reliance  of  those  who  assert  the  unconstitutionality  of  the  Legal 
Tender  Acts.  It  is  that  they  are  prohibited  by  the  spirit  of  the 
Constitution  because  they  indirectly  impair  the  obligation  of  con- 
tracts. The  argument,  of  course,  relates  only  to  those  contracts 
which  were  made  before  February,  1862,  when  the  first  Act  was 
passed,  and  it  has  no  bearing  upon  the  question  whether  the  Acts 
are  valid  when  applied  to  contracts  made  after  their  passage.  The 
argument  assumes  two  things — first,  that  the  Acts  do,  in  effect, 
impair  the  obligation  of  contracts ;  and,  second,  that  Congress  is 
prohibited  from  taking  any  action  which  may  indirectly  have  that 
effect.  Neither  of  these  assumptions  can  be  accepted.  It  is  true 
that  under  the  Acts  a  debtor,  who  became  such  before  they  were 
passed,  may  discharge  his  debt  with  the  notes  authorized  by  them, 
and  the  creditor  is  compellable  to  receive  such  notes  in  discharge 
of  his  claim.  But  whether  the  obligation  of  the  contract  is  thereby 
weakened  can  be  determined  only  after  considering  what  was  the 
contract  obligation.  It  is  not  a  duty  to  pay  gold  or  silver,  or  the 
kind  of  money  recognized  by  law  at  the  time  when  the  contract 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  229 

was  made,  nor  was  it  a  duty  to  pay  money  of  equal  intrinsic  value 
in  the  market.  (We  speak  now  of  contracts  to  pay  money  gen- 
erally, not  contracts  to  pay  some  specifically  defined  species  of 
money.)  The  expectation  of  the  creditor  and  the  anticipation  of 
the  debtor  may  have  been  that  the  contract  would  be  discharged 
by  the  payment  of  coined  metals,  but  neither  the  expectation  of 
one  party  to  the  contract,  respecting  its  fruits,  nor  the  anticipation 
of  the  other  constitutes  its  obligations.  Tnere  is  a  well  recognized 
distinction  between  the  expectation  of  the  parties  to  a  contract  and 
the  duty  imposed  by  it. 

v^Nor  can  it  be  truly  asserted  that  Congress  may  not,  by  its  action 
indirectly  impair  the  obligation  of  contracts,  if  by  the  expression 
be  meant  rendering  contracts  fruitless,  or  partially  fruitless.  Di- 
rectly it  may,  confessedly,  by  passing  a  Bankrupt  Act,  embracing 
past  as  well  as  future  transactions.  This  is  obliterating  contracts 
entirely.  So  it  may  relieve  parties  from  their  apparent  obligations 
indirectly  in  a  multitude  of  ways.  It  may  declare  war,  or  even  in 
peace,  pass  Non-intercourse  Acts,  or  direct  an  embargo.  All  such 
measures  may  and  must  operate  seriously  upon  existing  contracts 
and  may  not  merely  hinder,  but  relieve  the  parties  to  such  contracts 
entirely  from  performance.  It  is,  then  clear  that  the  powers  of 
Congress  may  be  exerted,  though  the  effect  of  such  an  exertion 
may  be  in  one  case  to  annul,  and  in  other  cases  to  impair  the 
obligation  of  contracts.  *  *  *  * 

Closely  applied  to  the  objection  we  have  just  been  considering, 
is  the  argument  pressed  upon  us  that  the  Legal  Tender  Acts  were 
prohibited  by  the  spirit  of  the  Fifth  Amendment,  which  forbids 
taking  private  property  for  public  use  without  just  compensation 
or  due  process  of  law.  That  provision  has  always  been  under- 
stood as  referring  only  to  a  direct  appropriation,  and  not  to  conse- 
quential injuries  resulting  from  the  exercise  of  lawful  power.  It 
has  never  been  supposed  to  have  any  bearing  upon  or  to  inhibit 
laws  that  indirectly  work  harm  and  loss  to  individuals.  A  new 
tariff,  an  embargo,  a  draft  or  a  war,  may  inevitably  bring  upon 
individuals  great  losses;  may  indeed  render  valuable  property 
almost  valueless.  They  may  destroy  the  worth  of  contracts.  But 
who  ever  supposed  that  because  of  this  a  tariff  could  not  be  changed 
or  a  non-intercourse  Act,  or  an  embargo  be  enacted,  or  a  war  be 
declared?  By  the  act  of  June  28th,  1834,  a  new  regulation  of 
the  weight  and  value  of  gold  coin  was  adopted,  and  about  six  per 
cent,  was  taken  from  the  weight  of  each  dollar.  The  effect  of  this 
was  that  all  creditors  were  subjected  to  a  corresponding  loss. 
The  debts  then  due  became  solvable  with  six  per  cent,  less  gold 
than  was  required  to  pay  them  before.  The  result  was  thus  pre- 
cisely what  it  is  contended  the  Legal  Tender  Acts  worked.  But 
was  it  ever  imagined  that  this  was  taking  private  property  without 
compensation  or  without  due  process  of  law? 

We  are  not  aware  of  anything  else  which  has  been  advanced  in 
support  of  the  proposition  that  the  Legal  Tender  Acts  were  for- 
bidden by  either  the  letter  or  spirit  of  the  Constitution.  If,  there- 


230  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

fore,  they  were,  what  we  have  endeavored  to  show,  appropriate 
means  for  legitimate  ends,  they  were  not  transgressive  of  the  author- 
ity vested  in  Congress.  Here  we  might  stop,  but  we  will  notice 
briefly  an  argument  presented  in  support  of  the  position  that  the 
unit  of  money  value  must  possess  intrinsic  value.  The  argument 
is  derived  from  assimilating  the  constitutional  provision  respecting 
a  standard  of  weights  and  measures  to  that  conferring  the  power 
to  coin  money  and  regulate  its  value.  It  is  said  there  can  be  no 
uniform  standard  of  weights  without  weight,  or  of  measure  without 
length  or  space,  and  we  are  asked  how  anything  can  be  made  a 
uniform  standard  of  value  which  has  itself  no  value?  This  is  a 
question  foreign  to  the  subject  before  us.  The  Legal  Tender  Acts 
do  not  attempt  to  make  paper  a  standard  of  value.  We  do  not 
rest  their  validity  upon  the  assertion  that  their  mission  is  coinage 
or  any  regulation  of  the  value  of  money;  nor  do  we  assert  that 
Congress  may  make  anything  which  has  no  value  money.  What 
we  do  assert  is  that  Congress  has  power  to  enact  that  the  Govern- 
ment's promises  to  pay  money  shall  be  for  the  time  being  equivalent 
in  value  to  the  representative  of  value  determined  by  the  coinage 
acts  or  to  multiples  thereof.  It  is  hardly  correct  to  speak  of  a 
standard  of  value.  The  Constitution  does  not  speak  of  it.  It  con- 
templates a  standard  for  that  which  has  gravity  or  extension,  but 
value  is  an  ideal  thing.  The  coinage  Acts  fix  its  unit  as  a  dollar; 
but  the  gold  or  silver  thing  we  call  a  dollar  is  in  no  sense  a  standard 
of  a  dollar.  It  is  a  representative  of  it.  There  might  never  have 
been  a  piece  of  money  of  the  denomination  of  a  dollar.  There 
never  was  a  pound  sterling  coined  until  1815,  if  we  except  a  few 
coins  struck  in  the  reign  of  Henry  VIII,  almost  immediately  de- 
based, yet  it  has  been  the  unit  of  British  currency  for  many  genera- 
tions. It  is,  then,  a  mistake  to  regard  the  Legal  Tender  Acts  as 
either  fixing  a  standard  of  value  or  regulating  money  values,  or 
making  that  money  which  has  no  intrinsic  value.  *  *  *  * 

But,  without  extending  our  remarks  further,  it  will  be  seen  that 
we  hold  the  Acts  of  Congress  constitutional  as  applied  to  contracts 
made  either  before  or  after  their  passage.  In  so  holding,  we 
overrule  so  much  of  what  was  decided  in  Hepburn  v.  Griswold,  8 
Wall,  603,  as  ruled  the  Acts  unwarranted  by  the  Consti- 
tution, so  far  as  they  apply  to  contracts  made  before  their 
enactment.  That  case  was  decided  by  a  divided  court,  and  by 
a  court  having  a  less  number  of  Judges  than  the  law  then  in  exist- 
ence provided  this  court  shall  have.  These  cases  have  been  heard 
before  a  full  court,  and  they  have  received  our  most  careful  con- 
sideration. The  questions  involved  are  constitutional  questions  of 
the  most  vital  importance  to  the  government  and  to  the  public  at 
large.  We  have  been  in  the  habit  of  treating  cases  involving  a 
consideration  of  constitutional  power  differently  from  those  which 
concern  merely  private  right.  Brisco  v.  Bank  of  Ky.,  8  Pet.,  118. 
We  are  not  accustomed  to  hear  them  in  the  absence  of  a  full  court, 
if  it  can  be  avoided.  Even  in  cases  involving  only  private  rights, 
if  convinces  we  have  made  a  mistake,  we  would  hear  another  argu- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  231 

ment  and  correct  our  error.  And  it  is  no  unprecedented  thing  in 
courts  of  last  resort  both  in  this  country  and  in  England  to  overrule 
decisions  previously  made.  We  agree  this  should  not  be  done 
inconsiderately,  but  in  a  case  of  such  far  reaching  consequences 
as  the  present,  thoroughly  convinced  as  we  are  that  Congress  has 
not  transgressed  its  powers,  we  regard  it  as  our  duty  so  to  decide 
and  to  affirm  both  these  judgments. 

Note. — Mr.  Justice  Bradley  filed  an  opinion  concurring  in  that  of  the 
court  and  giving  as  his  reason  for  voting  in  favor  of  the  constitutionality 
of  the  Acts  the  fact  that  it  was  necessary  to  provide  a  proper  currency  for 
the  country  and  especially  in  time  of  financial  pressure  and  threatened  col- 
lapse of  commercial  credit.  Mr.  Chief  Justice  Chase,  and  Justices  Clifford 
and  Field  filed  long  dissenting  opinions,  in  which  Mr.  Justice  Nelson  con- 
curred. The  gist  of  the  dissenting  opinions  was  that  the  court  had  decided 
the  present  questions  in  Hepburn  v.  Griswold  and  should  adhere  to  the  con- 
stitutional doctrines  therein  pronounced  that  gold  and  silver  coin  only 
could  be  legal  tender  without  contract  and  against  the  will  of  the  person 
to  whom  they  are  tendered. 

Note. — The  decision  in  the  case  of  Hepburn  vs.  Griswold  was  announced 
on  February  7,  1870;  five  Justices  voting  against  and  three  Justices  voting 
for  the  constitutionality  of  the  Legal  Tender  Acts.  Chief  Justice  Chase, 
Justices  Nelson,  Clifford,  Greer  and  Field  constituted  the  majority,  and 
Justices  Swayne,  Davis  and  Miller  the  minority.  On  the  facts  of  the  case, 
the  decision  was  applicable  only  to  cases  where  the  debt  was  in  existence 
before  the  Legal  Tender  Acts  were  passed,  yet  the  reasoning  of  the  majority 
seemed  to  deny  to  Congress  the  power  to  make  United  States  notes  legal 
tender  even  for  future  debts.  This  decision,  of  course,  caused  great  uneasi- 
ness to  business  men  throughout  the  country.  During  President  Johnson's 
administration  an  Act  had  been  passed  reducing  the  number  of  Judges  of 
the  Supreme  Court  from  nine  to  seven  for  the  purpose  of  depriving  him 
of  the  right  to  fill  vacancies  which  were  about  to  occur.  When  Hepburn  vs. 
Griswold  was  decided,  there  was  one  vacancy  on  the  Supreme  Court  Bench, 
and  one  of  the  majority  Judges  had  resigned,  though  his  resignation  did 
not  take  effect  until  after  the  decision  was  rendered.  After  President  Grant's 
inauguration,  the  number  of  Supreme  Court  Judges  was  restored  to  nine, 
and  on  February  18,  1870,  President  Grant  appointed  William  Strong,  of 
Pennsylvania,  to  fill  one  of  the  vacancies,  and  on  March  21,  1870,  Joseph  P. 
Bradley,  of  New  Jersey,  to  fill  the  other. 

In  his  work  on  Congressional  Government,  page  38,  Woodrow  Wilson, 
speaking  of  these  appointments,  says : 

"In  December,  1869,  the  Supreme  Court  decided  against  the  constitutionality 
"of  Congress's  pet  Legal  Tender  Acts,  and  in  the  following  March  a  vacancy 
"on  the  Bench  opportunely  occurring,  and  a  new  Justiceship  having  been 
"created  to  meet  the  emergency,  the  Senate  gave  the  President  to  understand 
"that  no  nominee  unfavorable  to  the  debated  Acts  would  be  confirmed,  two 
"Justices  of  the  predominate  party's  way  of  thinking  were  appointed.  The 


R«turn  to 


232  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

"hostile  majority  of  the  Court  was  out-voted,   and  the  obnoxious   decision 
"reversed." 

On  May  1,  1871,  the  Court  as  reorganized  announced  the  decision  in 
Knox  v.  Lee  reported  above,  upholding  the  Legal  Tender  Acts  on  the  ground 
that  they  were  reasonably  necessary  to  carry  on  the  war,  and  so  justified  under 
the  power  to  make  war.  Mr.  Justice  Strong,  one  of  the  new  appointees, 
wrote  the  prevailing  opinion,  and  Mr.  Justice  Bradley,  the  other,  wrote  a 
concurring  opinion.  Chief  Justice  Chase,  and  Justices  Nelson,  Clifford  and 
Field  dissented  from  the  decision.  In  1878  Congress  ordered  a  re-issue  of 
the  Legal  Tender  notes,  and  as  the  Act  could  no  longer  be  justified  as  a 
war  measure,  its  validity  was  again  challenged,  and  it  was  finally  upheld  in 
the  following  case  of  Julliard  vs.  Greenman. 


JUILLIARD  v.  GREENMAN. 
110  U.  S.,  421.     1883. 

Juilliard,  a  citizen  of  New  York,  brought  suit  against  Greeman, 
a  citizen  of  Connecticut,  to  recover  the  sum  of  $5,122.90  in  payment 
of  one  hundred  bales  of  cotton  sold  and  delivered  to  Greenman,  who 
admitted  the  purchase  and  delivery  of  the  cotton,  and  the  agreement 
to  pay  for  them.  Greenman  stated  that  he  had  offered  and  ten- 
dered to  Juilliard,  in  payment  of  the  debt,  $22.50  in  United  States 
gold  coin,  forty  cents  in  silver  coin,  and  two  United  States  notes, 
one  of  the  denomination  of  $5,000,  and  the  other  of  the  denomina- 
tion of  $100.  The  two  notes  were  known  as  United  States  legal 
tender  notes.  These  notes  were  originally  issued  under  the  acts  of 
Congress  of  1862  and  1863,  and  reissued  and  kept  in  circulation 
under  the  act  of  Congress  of  May  31,  1878.  The  plaintiff  had  re- 
fused to  take  the  notes,  and  contended  that  the  defence  was  insuf- 
ficient in  law.  The  Circuit  Court  in  New  York  gave  judgment  for 
Greenman.  The  case  was  appealed  to  the  Supreme  Court  of  the 
United  States. 

MR.  JUSTICE  GRAY  delivered  the  opinion  of  the  court. 

The  notes  of  the  United  States,  tendered  in  payment  of  the  de- 
fendant's debt  to  the  plaintiff,  were  originally  issued  under  the  acts 
of  Congress  of  February  25,  1862,  ch.  33,  July  11,  1862,  ch.  142, 
and  March  3,  1863,  ch.  73,  passed  during  the  War  of  the  Rebellion, 
and  enacting  that  these  notes  should  "be  lawful  money  and  a  legal 
tender  in  payment  of  all  debts,  public  and  private,  within  the  United 
States,"  except  for  duties  on  imports  and  interest  on  the  public  debt. 
12  Stat.  345,  532,  709.  *  *  *  * 

The  act  of  May  31,  1878,  ch.  146,  under  which  the  notes  in  ques- 
tion were  reissued,  is  entitled  "An  Act  to  forbid  the  further  retire- 
ment of  United  States  legal  tender  notes/'  and  enacts  as  follows :— 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  233 

"From  and  after  the  passage  of  this  act  it  shall  not  be  lawful  for 
the  Secretary  of  the  Treasury  or  other  officer  under  him  to  cancel 
or  retire  any  more  of  the  United  States  legal  tender  notes.  And 
when  any  of  said  notes  may  be  redeemed  or  be  received  into  the 
Treasury  under  any  law  from  any  source  whatever  and  shall  be- 
long to  the  United  States,  they  shall  not  be  retired,  cancelled,  or  de- 
stroyed, but  they  shall  be  reissued  and  paid  out  again  and  kept  in 
circulation:  Provided,  That  nothing  herein  shall  prohibit  the  can- 
cellation and  destruction  of  mutilated  notes  and  the  issue  of  other 
notes  of  like  denomination  in  their  stead,  as  now  provided  by  law. 
All  acts  and  parts  of  acts  in  conflict  herewith,  are  hereby  repealed." 
20  Stat.  87. 

The  manifest  intention  of  this  act  is  that  the  notes  which  it  directs 
after  having  been  redeemed,  to  be  reissued  and  kept  in  circulation 
shall  retain  their  original  quality  of  being'a  legal  tender. 

The  single  question,  therefore,  to  be  considered,  and  upon  the 
answer  to  which  the  judgment  to  be  rendered  between  these  parties 
depends,  is  whether  notes  of  the  United  States,  issued  in  time  of 
war,  under  acts  of  Congress,  declaring  them  to  be  a  legal  tender  in 
payment  of  private  debts,  and  afterwards  in  time  of  peace  redeemed 
and  paid  in  gold  coin  at  the  Treasury,  and  then  reissued  under  the 
act  of  1878,  can,  under  the  Constitution  of  the  United  States,  be  a 
legal  tender  in  payment  of  such  debts. 

The  constitutional  authority  of  Congress  to  provide  a  currency  for 
the  whole  country  is  now  firmly  established.  In  Veazie  Bank  v. 
Fenno,  8  Wall.  533,  548,  Chief  Justice  Chase,  in  delivering  the 
opinion  of  the  court,  said:  "It  cannot  be  doubted  that  under  the 
Constitution  the  power  to  provide  a  circulation  of  coin  is  given  to 
Congress.  And  it  is  settled  by  the  uniform  practice  of  the  govern- 
ment, and  by  repeated  decisions,  that  Congress  may  constitutionally 
authorize  the  emission  of  bills  of  credit."  Congress,  having  under- 
taken to  supply  a  national  currency,  consisting  of  coin,  of  treasury 
notes  of  the  United  States,  and  of  the  bills  of  national  banks,  is 
authorized  to  impose  on  all  State  banks,  or  national  banks,  or  private 
bankers,  paying  out  the  notes  of  individuals,  or  of  State  banks,  a  tax 
of  ten  per  cent,  upon  the  amount  of  such  notes  so  paid  out.  Veazie 
Bank  v.  Fenno,  above  cited;  National  Bank  v.  United  States,  101 
U.  S.,  1.  The  reason  for  this  conclusion  was  stated  by  Chief  Justice 
Chase,  and  repeated  by  the  present  Chief  Justice,  in  these  words : 
"Having  thus,  in  the  exercise  of  undisputed  constitutional  powers, 
undertaken  to  provide  a  currency  for  the  whole  country,  it  cannot 
be  questioned  that  Congress  may  constitutionally,  secure  the  benefit 
of  it  to  the  people  by  appropriate  legislation.  To  this  end,  Congress 
has  denied  the  quality  of  legal  tender  for  foreign  coins,  and  has  pro- 
vided by  law  against  the  imposition  of  counterfeit  and  base  coin  on 
the  community.  To  the  same  end,  Congress  may  restrain,  by  suit- 
able enactments,  the  circulation  as  money  of  any  notes  not  issued 
under  its  own  authority.  Without  this  power,  indeed,  its  attempts 


234  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

to  secure  a  sound  and  uniform  currency  for  the  country  must  be 
futile."    8  Wall.  549;  101  U.  S.,  6.     *     *     *     * 

It  appears  to  us  to  follow,  as  a  logical  and  necessary  consequence, 
that  Congress  has  the  power  to  issue  the  obligations  of  the  United 
States  is  such  form,  and  to  impress  upon  them  such  qualities  as 
currency  for  the  purchase  of  merchandise  and  the  payment  of  debts, 
as  accord  with  the  usage  of  sovereign  governments.  The  power,  as 
incident  to  the  power  of  borrowing  money  and  issuing  bills  or  notes 
of  the  government  for  money  borrowed,  of  impressing  upon  those 
bills  or  notes  the  quality  of  being  a  legal  tender  for  the  payment  of 
private  debts,  was  a  power  universally  understood  to  belong  to 
sovereignty,  in  Europe  and  America,  at  the  time  of  the  framing  and 
adoption  of  the  Constitution  of  the  United  States.  The  governments 
of  Europe,  acting  through  the  monarch  or  the  legislature,  according 
to  the  distribution  of  powers  under  their  respective  constitutions,  had 
and  have  as  sovereign  a  power  of  issuing  paper  money  as  of  stamp- 
ing coin.  This  power  has  been  distinctly  recognized  in  an  import- 
ant modern  case,  ably  argued  and  fully  considered,  in  which  the 
Emperor  of  Austria,  as  King  of  Hungary,  obtained  from  the  Eng- 
lish Court  of  Chancery  an  injunction  against  the  issue  in  England, 
without  his  license,  of  notes  purporting  to  be  public  paper  money  of 
Hungary.  Austria  v.  Day,  2  Giff.  628,  and  3  D.  F.  &  J.  217.  This 
power  of  issuing  bills  of  credit,  and  making  them,  at  the  discretion 
of  the  legislature,  a  tender  in  payment  of  private  debts,  had  long 
been  exercised  in  this  country  by  the  several  colonies  and  States; 
and  during  the  Revolutionary  War  the  States,  upon  the  recommen- 
dation of  the  Congress  of  the  Confederation,  had  made  the  bills 
issued  by  Congress  a  legal  tender.  *  *  *  * 

This  position  is  fortified  by  the  fact  that  Congress  is  vested  with 
the  exclusive  exercise  of  the  analogous  power  of  coining  money  and 
regulating  the  value  of  domestic  and  -foreign  coin,  and  also  with  the 
paramount  power  of  regulating  foreign  and  interstate  commerce. 
Under  the  power  to  borrow  money  on  the  credit  of  the  United  States, 
and  to  issue  circulating  notes  for  the  money  borrowed,  its  power  to 
define  the  quality  and  force  of  those  notes  as  currency  is  as  broad  as 
the  like  power  over  a  metallic  currency  under  the  power  to  coin 
money  and  to  regulate  the  value  thereof.  Under  the  two  powers, 
taken  together,  Congress  is  authorized  to  establish  a  national  cur- 
rency, either  in  coin  or  in  paper,  and  to  make  that  currency  lawful 
money  for  all  purposes,  as  regards  the  national  government  or  pri- 
vate individuals. 

The  power  of  making  the  notes  of  the  United  States  a  legal  tender 
in  payment  of  private  debts,  being  included  in  the  power  to  borrow 
money  and  to  provide  a  national  currency,  is  not  defeated  or  re- 
stricted by  the  fact  that  its  exercise  may  affect  the  value  of  private 
contracts.  If,  upon  a  just  and  fair  interpretation  of  the  whole  Con- 
stitution, a  particular  power  or  authority  appears  to  be  vested  in  Con- 
gress, it  is  no  constitutional  objection  to  its  existence,  or  to  its  exer- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  235 

cise,  that  the  property  or  the  contracts  of  individuals  may  be  inci- 
dentally affected.  The  decisions  of  this  court,  already  cited,  afford 
several  samples  of  this.  *  *  *  * 

Congress,  as  the  legislature  of  a  sovereign  nation,  being  expressly 
empowered  by  the  Constitution  "to  lay  and  collect  taxes,  to  pay  the 
debts  and  provide  for  the  common  defence  and  general  welfare  of 
the  United  States,"  and  "to  borrow  money  on  the  credit  of  the 
United  States,"  and  "to  coin  money  and  regulate  the  value  thereof 
and  of  foreign  coin ;"  and  being  clearly  authorized,  as  incidental  to 
the  exercise  of  those  great  powers,  to  emit  bills  of  credit,  to  charter 
national  banks,  and  to  provide  a  national  currency  for  the  whole 
people,  in  the  form  of  coin,  treasury  notes,  and  national  bank  bills ; 
and  the  power  to  make  the  notes  of  the  government  a  legal  tender  in 
payment  of  private  debts  being  one  of  the  powers  belonging  to  sov- 
ereignty in  other  civilized  nations,  and  not  expressly  withheld  from 
Congress  by  the  Constitution;  we  are  irresistibly  impelled  to  the 
conclusion  that  the  impressing  upon  the  treasury  notes  of  the  United 
States  the  quality  of  being  a  legal  tender  in  payment  of  private  debts 
is  an  appropriate  means,  conducive  and  plainly  adapted  to  the  ex- 
ecution of  the  undoubted  powers  of  Congress,  consistent  with  the 
letter  and  spirit  of  the  Constitution,  and  therefore,  within  the  mean- 
ing of  that  instrument,  "necessary  and  proper  for  carrying  into  ex- 
ecution the  powers  vested  by  this  Constitution  in  the  government  of 
the  United  States." 

It  follows  that  the  act  of  May  31,  1878,  ch.  146,  is  constitutional 
and  valid ;  and  that  the  Circuit  Court  rightly  held  that  the  tender  in 
treasury  notes,  reissued  and  kept  in  circulation  under  the  act,  was  a 
tender  and  lawful  money  in  payment  of  the  defendant's  debt  to  the 
plaintiff.  Judgment  affirmed. 


Note. — See  also  Veazie  Bank  v.  Fenno,  page  48. 

Section  4. 
THE  WAR  POWER  OF  CONGRESS. 

2  BLACK.  635.    1862. 
THE  PRIZE  CASES. 

These  case  were  brought  to  test  the  legality  of  the  seizure  of 
certain  vessels  found  running  the  blockade  of  the  Southern  ports 
during  the  Civil  War.  (The  details  of  the  cases  are  omitted  and 
only  a  portion  of  the  opinion  dealing  with  the  war  power  of  Con- 
gress is  here  cited.) 


236  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

MR.  JUSTICE  GRIER  delivered  the  opinion  of  the  court. 

By  the  Constitution,  Congress  alone  has  the  power  to  declare  a 
national  or  foreign  war.  It  cannot  declare  war  against  a  State,  or 
any  number  of  States,  by  virtue  of  any  clause  in  the  Constitution. 
The  Constitution  confers  on  the  President  the  whole  executive 
power.  He  is  bound  to  take  care  that  the  laws  be  faithfully  exe- 
cuted. He  is  commander-in-chief  of  the  Army  and  Navy  of  the 
United  States,  and  of  the  militia  of  the  several  States  when  called 
into  the  actual  service  of  the  United  States.  He  has  no  power  to 
initiate  or  declare  a  war  either  against  a  foreign  nation  or  a  domestic 
State.  But  by  the  Acts  of  Congress  of  February  28,  1795,  and  3d  of 
March,  1807,  he  is  authorized  to  call  out  the  militia  and  use  the  mili- 
tary and  naval  forces  of  the  United  States  in  case  of  invasion  of 
foreign  nations,  and  to  suppress  insurrection  against  the  government 
of  a  State  or  of  the  United  States. 

If  a  war  be  made  by  invasion  of  a  foreign  nation,  the  President  is 
not  only  authorized  but  bound  to  resist  force  by  force.  He  does  not 
initiate  the  war,  but  is  bound  to  accept  the  challenge  without  waiting 
for  any  special  legislative  authority.  And  whether  the  hostile  party 
be  a  foreign  invader,  or  States  organized  in  rebellion,  it  is  none  the 
less  a  war,  although  the  declaration  of  it  be  "unilateral."  Lord 
Stowell  (1  Dodson,  247)  observes:  "It  is  not  the  less  a  war  on  that 
account,  for  war  may  exist  without  a  declaration  on  either  side.  It 
is  so  laid  down  by  the  best  writers  on  the  law  of  nations.  A  dec- 
laration of  war  by  one  country  only,  is  not  a  mere  challenge  to  be 
accepted  or  refused  at  pleasure  by  the  other." 

The  battles  of  Palo  Alto  and  Resaca  de  la  Palma  had  been  fought 
before  the  passage  of  the  Act  of  Congress  of  May  13,  1846,  which 
recognized  "a  state  of  war  as  existing  by  the  act  of  the  Republic  of 
Mexico"  This  act  not  only  provided  for  the  future  prosecution  of 
the  war,  but  was  itself  a  vindication  and  ratification  of  the  act  of  the 
President  in  accepting  the  challenge  without  a  previous  formal  dec- 
laration of  war  by  Congress. 

This  greatest  of  civil  wars  was  not  gradually  developed  by  popu- 
lar commotion,  tumultuous  assemblies,  or  local  unorganized  insurrec- 
tions. However  long  may  have  been  its  previous  conception,  it 
nevertheless  sprung  forth  suddenly  from  the  parent  brain  ,  a  Minerva 
in  the  full  panoply  of  war.  The  President  was  bound  to  meet  it  in 
the  shape  it  presented  itself,  without  waiting  for  Congress  to  baptize 
it  with  a  name,  and  no  name  given  to  it  by  him  or  them  could 
change  the  fact.  Seizure  of  vessels  was  upheld. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  237 

Section  5. 

THE  POWER  OF  CONGRESS  OVER  THE  TERRITORIES. 

Sub-Section  A. 
THE  INSULAR  TARIFF  CASES. 

DE  LIMA  v.  BIDWELL. 
182  U.  S.,  1.    1900. 

This  was  an  action  in  the  Supreme  Court  of  New  York  State  by 
the  firm  of  De  Lima  &  Co.,  against  the  collector  of  the  port  of  New 
York,  G.  R.  Bidwell,  to  recover  duties  paid  under  protest  upon 
certain  importations  of  sugar  from  San  Juan,  Porto  Rico,  during 
the  autumn  of  1899,  and  subsequent  to  the  cession  of  the  island  to 
the  United  States.  (The  Foraker  Act  of  April  12,  1900,  had  not 
been  passed  when  these  goods  were  brought  into  New  York).  The 
case  was  removed  to  the  Circuit  Court  of  the  United  States,  which 
decided  in  favor  of  the  collector  of  the  port  and  against  De  Lima  & 
Co.'s  right  to  recover  the  duties.  De  Lima  &  Co.  then  appealed  the 
case  to  the  Supreme  Court  of  the  United  States,  and  claimed  that 
the  tariff  duties  could  only  be  collected  on  goods  coming  from  a 
foreign  country  and  that  Porto  Rico  since  the  Spanish-American 
war  was  no  longer  a  foreign  country. 

MR.  JUSTICE  BROWN  delivered  the  opinion  of  the  court. 

This  case  raises  the  single  question  whether  territory  acquired 
by  the  United  States  by  cession  from  a  foreign  power  remains  a 
"foreign  country"  within  the  meaning  of  the  tariff  laws.  *  *  *  * 

By  Article  II,  section  2,  of  the  Constitution,  the  President  is  given 
power,  "by  and  with  the  advice  and  consent  of  the  Senate,  to  make 
treaties,  provided  that  two-thirds  of  the  senators  present  concur;" 
and  by  Art.  VI,  "this  Constitution  and  the  laws  of  the  United  States, 
which  shall  be  made  in  pursuance  thereof ;  and  all  treaties  made  or 
which  shall  be  made,  under  the  authority  of  the  United  States,  shall 
be  the  supreme  law  of  the  land."  It  will  be  observed  that  no  distinc- 
tion is  made  as  to  the  question  of  supremacy  between  laws  and 
treaties,  except  that  both  are  controlled  by  the  Constitution.  A  law 
requires  the  assent  of  both  houses  of  Congress,  and,  except  in  cer- 
tain specified  cases,  the  signature  of  the  President.  A  treaty  is  nego- 
tiated and  made  by  the  President,  with  the  concurrence  of  two-thirds 
of  the  senators  present,  but  each  of  them  is  the  supreme  law  of  the 
land. 

One  of  the  ordinary  incidents  of  a  treaty  is  the  cession  of  terri- 
tory. It  is  not  too  much  to  say  it  is  the  rule,  rather  than  the  excep- 


238  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

tion,  that  a  treaty  of  peace,  following  upon  a  war,  provides  for  a 
cession  of  territory  to  the  victorious  party.  It  was  said  by  Chief  Jus- 
tice Marshall  in  American  Ins.  Co.  v.  Canter,  1  Pet.  511,  542;  "The 
Constitution  confers  absolutely  upon  the  government  of  the  Union 
the  powers  of  making  war  and  of  making  treaties;  consequently 
that  government  possesses  the  power  of  acquiring  territory,  either  by 
conquest  or  by  treaty."  The  territory  thus  acquired  is  acquired  as 
absolutely  as  if  the  annexation  were  made,  as  in  the  case  of  Texas 
and  Hawaii,  by  an  Act  of  Congress. 

It  follows  from  this  that  by  a  ratification  of  the  treaty  of  Paris 
the  island  became  territory  of  the  United  States — although  not  an 
organized  territory  in  the  technical  sense  of  the  word.  *  *  *  * 

But  whatever  be  the  source  of  this  power,  its  uninterrupted  exer- 
cise by  Congress  for  a  century,  and  the  repeated  declarations  of  this 
court,  have  settled  the  law  that  the  right  to  acquire  territory  involves 
the  right  to  govern  and  dispose  of  it.  That  was  stated  by  Chief  Jus- 
tice Taney  in  the  Dred  Scott  case.  In  the  more  recent  case  of  Na- 
tional Bank  v.  County  of  Yankton,  101  U.  S.,  129,  it  was  said  by 
Mr.  Chief  Justice  Waite  that  Congress  "has  full  and  complete  leg- 
lative  authority  over  the  people  of  the  territories  and  all  the  de- 
partments of  the  territorial  governments.  It  may  do  for  the  terri- 
tories what  the  people  under  the  Constitution  of  the  United  States, 
may  do  for  the  States."  *  *  *  *  In  short,  when  once  acquired  by 
treaty,  it  (the  territory)  belongs  to  the  United  States,  and  is  subject 
to  the  disposition  of  Congress. 

Territory  thus  acquired  can  remain  a  foreign  country  under  the 
tariff  laws  only  upon  one  of  two  theories ;  either  that  the  word  "for- 
eign" applies  to  such  countries  as  were  foreign  at  the  time  the  statute 
was  enacted,  notwithstanding  any  subsequent  change  in  their  condi- 
tion, or  that  they  remain  foreign  under  the  tariff  laws  until  Congress 
has  formally  embraced  them  within  the  customs  union  of  the  States. 
The  first  theory  is  obviously  untenable.  While  a  statute  is  presumed 
to  speak  from  the  time  of  its  enactment,  it  embraces  all  such  persons 
or  things  as  subsequently  fall  within  its  scope,  and  ceases  to  apply  to 
such  as  thereafter  fall  without  its  scope.  Thus,  a  statute  forbidding 
the  sale  of  liquors  to  minors  applies  not  only  to  minors  in  existence 
at  the  time  the  statute  was  enacted,  but  to  all  who  are  subsequently 
born ;  and  ceases  to  apply  to  such  as  thereafter  reach  their  majority. 
So,  when  the  Constitution  of  the  United  States  declares  in  Art.  I, 
Sec.  10,  that  the  States  shall  .not  do  certain  things,  this  declaration 
operates  not  only  upon  the  thirteen  original  States,  but  upon  all  who 
subsequently  become  such ;  and  when  Congress  places  certain  restric- 
tions upon  the  powers  of  a  territorial  legislature,  such  restrictions 
cease  to  operate  the  moment  such  territory  is  admitted  as  a  State. 
By  parity  of  reasoning  a  country  ceases  to  be  foreign  the  instant  it 
becomes  domestic.  So,  too,  if  Congress  saw  fit  to  cede  one  of  its 
newly  acquired  territories  (even  assuming  that  it  had  the  right  to  do 
so)  to  a  foreign  power,  there  could  be  no  doubt  that  from  the  day  of 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  239 

such  cession  and  the  delivery  of  possession,  such  territory  would 
become  a  foreign  country,  and  be  reinstated  as  such  under  the  tariff 
laws.  Certainly  no  act  of  Congress  would  be  necessary  in  such  case 
to  declare  that  the  laws  of  the  United  States  had  ceased  to  apply 
to  it. 

The  theory  that  a  country  remains  foreign  with  respect  to  the 
tariff  laws  until  Congress  has  acted  by  embracing  it  within  the  Cus- 
toms Union,  presupposes  that  a  country  may  be  domestic  for  one 
purpose  and  foreign  for  another.  It  may  undoubtedly  become  nec- 
essary for  the  adequate  administration  of  a  domestic  territory  to  pass 
a  special  act  providing  the  proper  machinery  and  officers,  as  the 
President  would  have  no  authority,  except  under  the  war  power, 
to  administer  it  himself ;  but  no  act  is  necessary  to  make  it  domes- 
tic territory  if  once  it  has  been  ceded  to  the  United  States.  We  ex- 
press no  opinion  as  to  whether  Congress  is  bound  to  appropriate  the 
money  to  pay  for  it.  This  has  been  much  discussed  by  writers  upon 
constitutional  law,  but  it  is  not  necessary  to  consider  it  in  this  case, 
as  Congress  made  prompt  appropriation  of  the  money  stipulated  in 
the  treaty.  This  theory  also  presupposes  that  territory  may  be  held 
indefinitely  by  the  United  States;  that  it  may  be  treated  in  every 
particular,  except  for  tariff  purposes,  as  domestic  territory;  that 
laws  may  be  enacted  and  enforced  by  officers  of  the  United  States 
sent  there  for  that  purpose;  that  insurrections  may  be  suppressed, 
wars  carried  on,  revenues  collected,  taxes  imposed;  in  short,  that 
everything  may  be  done  which  a  government  can  do  within  its 
own  boundaries,  and  yet  that  territory  may  still  remain  a  foreign 
country.  That  this  state  of  things  may  continue  for  years,  for  a 
century  even,  but  that  until  Congress  enacts  otherwise,  it  still  re- 
mains a  foreign  country.  To  hold  that  this  can  be  done  as  a  matter 
of  law  we  deem  to  be  judicial  legislation.  We  find  no  warrant  for 
it  in  the  Constitution  or  in  the  powers  conferred  upon  this  court.  It 
is  true  the  non-action  of  Congress  may  occasion  a  temporary  incon- 
venience; but  it  does  not  follow  that  courts  of  justice  are  authorized 
to  remedy  it  by  inverting  the  ordinary  meaning  of  words. 

If  an  Act  of  Congress  be  necessary  to  convert  a  foreign  country 
into  domestic  territory,  the  question  at  once  suggests  itself,  what  is 
the  character  of  the  legislation  demanded  for  this  purpose  ?  Will  an 
act  appropriating  money  for  its  purchase  be  sufficient.  Apparently 
not.  Will  an  act  appropriating  the  duties  collected  upon  imports  to 
and  from  such  country  for  the  benefit  of  its  government  be  suffi- 
cient? Apparently  not.  Will  acts  making  appropriations  for  its 
postal  service,  for  the  establishment  of  lighthouses,  for  the  main- 
tenance of  quarantine  stations,  for  erecting  public  buildings,  have 
that  effect?  Will  an  act  establishing  a  complete  local  government, 
but  with  the  reservation  of  a  right  to  collect  duties  upon  commerce, 
be  adequate  for  that  purpose?  None  of  these,  nor  all  together,  will 
be  sufficient,  if  the  contention  of  the  government  be  sound,  since  acts 
embracing  all  these  provisions  have  been  passed  in  connection  with 


2  }o  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Porto  Rico,  and  it  insisted  that  it  is  still  a  foreign  country  within 
the  meaning  of  the  tariff  laws.  We  are  unable  to  acquiesce  in  this 
assumption  that  a  territory  may  be  at  the  same  time  both  foreign 
and  domestic. 

We  are  therefore  of  the  opinion  that  at  the  time  these  duties  were 
levied  Porto  Rico  was  not  a  foreign  country,  within  the  meaning  of 
the  tariff  laws,  but  a  territory  of  the  United  States,  that  the  duties 
were  illegally  exacted  and  that  the  plaintiffs  are  entitled  to  recover 
them. 

The  judgment  of  the  Circuit  Court  is  therefore          Reversed. 

NOTE.  Five  justices  concurred  in  the  majority  opinion.  Three  justices  dis- 
sented upon  the  ground  that  as  the  custom  laws  of  the  United  States  had  not 
as  yet  been  applied  by  Congress  to  Porto  Rico,  that  such  island  was  still  for- 
eign within  the  meaning  of  the  Dingley  Tariff  act.  Justice  Gray  dissented 
upon  the  ground  that  the  majority  opinion  was  irreconcilable  with  the  opinion 
of  the  majority  of  the  court  in  Downes  v.  Bidwell. 


DOWNES  v.  BIDWELL. 
182  U.  S.,  244.     1900. 

This  was  an  action  begun  in  the  Circuit  Court  of  the  United 
States  for  the  southern  district  of  New  York,  by  Downes,  against 
the  collector  of  the  port  of  New  York,  Bidwell,  to  recover  duties 
paid  under  protest  upon  certain  oranges  consigned  to  Downes  in 
New  York  and  brought  thither  from  San  Juan,  Porto  Rico,  in  No- 
vember, 1900,  after  the  passage  of  ,the  Act  of  Congress  taking  effect 
May  1,  1900,  and  known  as  the  Foraker  act,  which  provided  for  a 
civil  government  and  revenues  for  the  island  of  Porto  Rico  and  re- 
quired that  the  payment  of  15  per  cent,  of  the  duty  levied  on  like 
articles  from  foreign  countries  should  be  collected  on  goods  coming 
from  Porto  Rico.  The  Circuit  Court  decided  in  favor  of  the  col- 
lector of  the  port  of  New  York  and  against  Downes'  right  to  re- 
cover the  duties,  whereupon  Downes  appealed  to  the  United  States 
Supreme  Court. 

MR.  JUSTICE  BROWN  announced  the  conclusion  and  judgment  of 
the  court.  *  *  *  * 

In  the  case  of  De  Lima  v.  Bidwell,  just  decided,  we  held  that 
upon  the  ratification  of  the  treaty  of  peace  with  Spain,  Porto  Rico 
ceased  to  be  a  foreign  country,  and  became  a  territory  of  the  United 
States,  and  that  duties  were  no  longer  collectible  upon  merchandise 
brought  from  that  island.  We  are  now  asked  to  hold  that  it  became 
a  part  of  the  United  States  within  that  provision  of  the  Constitution 
which  declares  that  "all  duties,  imposts  and  exercises  shall  be  uniform 
throughout  the  United  States."  (Art.  I,  Sec.  8.)  If  Porto  Rico  be  a 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  241 

part  of  the  United  States,  the  Foraker  act  imposing  duties  upon  its 
products  is  unconstitutional,  not  only  by  reason  of  a  violation  of  the 
uniformity  clause,  but  because  by  Sec.  9  "vessels  bound  to  or  from 
one  State"  cannot  "be  obliged  to  enter,  clear,  or  pay  duties  in  an- 
other." 

The  case  also  involves  the  broader  question  whether  the  revenue 
clauses  of  the  Constitution  extend  of  their  own  force  to  our  newly 
acquired  territories.  The  Constitution  itself  does  not  answer  the 
question.  Its  solution  must  be  found  in  the  nature  of  the  govern- 
ment created  by  that  instrument,  in  the  opinion  of  its  contempora- 
ries, in  the  practical  construction  put  upon  it  by  Congress  and  in  the 
decisions  of  this  court.  *  *  *  * 

To  sustain  the  judgment  in  the  case  under  consideration  it  by  no 
means  becomes  necessary  to  show  that  none  of  the  articles  of  the 
Constitution  apply  to  the  Island  of  Porto  Rico.  There  is  a  clear  dis- 
tinction between  such  prohibitions  as  go  to  the  very  root  of  the  power 
of  Congress  to  act  at  all,  irrespective  of  time  or  place,  and  such 
as  are  operative  only  "throughout  the  United  States"  or  among  the 
several  States.  *  *  *  * 

Upon  the  other  hand,  when  the  Constitution  declares  that  all  duties 
shall  be  uniform  "throughout  the  United\States,"  it  becomes  neces- 
sary to  inquire  whether  there  be  any  territory  over  which  Congress 
has  jurisdiction  which  is  not  a  part  of  the  "United  States,"  by  which 
term  we  understand  the  States  whose  people  united  to  form  the 
Constitution,  and  such  as  have  been  since  admitted  to  the  Union  up- 
on an  equality  with  them.  Not  only  did  the  people  in  adopting  the 
Thirteenth  Amendment  thus  recognize  a  distinction  between  the 
United  States  and  "any  place  subject  to  their  jurisdiction,"  but  Con- 
gress itself,  in  the  Act  of  March  27,  1804,  providing  for  the  proof  of 
public  records,  applied  the  provisions  of  the  act  not  only  to  "every 
court  and  office  within  the  United  States,"  but  to  the  "courts  and 
offices  of  the  respective  territories  of  the  United  States  and  countries 
subject  to  the  jurisdiction  of  the  United  States,"  as  to  the  courts  and 
offices  of  the  several  States. 

Unless  these  words  are  to  be  rejected  as  meaningless,  we  must 
treat  them  as  a  recognition  by  Congress  of  the  fact  that  there  may 
be  territories  subject  to  the  jurisdiction  of  the  United  States,  which 
are  not  of  the  United  States. 

In  determining  the  meaning  of  the  words  of  Article  I,  Section  6, 
"uniform  throughout  the  United  States,"  we  are  bound  to  consider 
not  only  the  provisions  forbidding  preference  being  given  to  the  ports 
of  one  State  over  those  of  another  (to  which  attention  has  already 
been  called),  but  the  other  clauses  declaring  that  no  tax  or  duty 
shall  be  laid  on  articles  exported  from  any  State,  and  that  no  State 
shall,  without  the  consent  of  Congress,  lay  any  imposts  or  duties 
upon  imports  or  exports,  nor  any  duty  on  tonnage.  The  object  of  all 
of  these  was  to  protect  the  States  which  united  in  forming  the  Con- 
stitution from  discriminations  by  Congress,  which  would  operate  un- 


242  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

fairly  or  injuriously  upon  some  States  and  not  equally  upon  others. 
The  opinion  of  Mr.  Justice  White  in  Knowlton  v.  Moore  (178  U.  S. 
41)  contains  an  elaborate  historical  review  of  the  proceedings  in  the 
convention,  which  resulted  in  the  adoption  of  these  different  clauses 
and  their  arrangement,  and  he  there  comes  to  the  conclusion  (p.  105) 
that  "although  the  provision  as  to  preference  between  ports  and 
that  regarding  uniformity  of  duties,  imposts  and  excises  were  one 
in  purpose,  one  in  their  adoption,"  they  were  originally  placed  to- 
gether, and  "became  separate  only  in  arranging  the  Constitution  for 
the  purpose  of  style."  Thus  construed  together,  the  purpose  is  ir- 
resistible that  the  words  "throughout  the  United  States"  are  indistin- 
guishable from  the  words  "among  or  between  the  several  States," 
and  that  these  prohibitions  were  intended  to  apply  only  to  commerce 
between  ports  of  the  several  States  as  they  then  existed  or  should 
thereafter  be  admitted  to  the  Union. 

Indeed,  the  practical  interpretation  put  by  Congress  upon  the  Con- 
stitution has  been  long  continued  and  uniform  to  the  effect  that  the 
Constitution  is  applicable  to  territories  acquired  by  purchase  or  con- 
quest only  when  and  so  far  as  Congress  shall  so  direct.  *  *  *  * 

We  are  also  of  opinion  that  the  power  to  acquire  territory  by 
treaty  implies  not  only  the  power  to  govern  such  territory,  but  to 
prescribe  upon  what  terms  the  United  States  shall  receive  its  inhabi- 
tants and  what  their  status  shall  be  in  what  Chief  Justice  Marshall 
termed  the  "American  Empire."  There  seems  to  be  no  middle 
ground  between  this  position  and  the  doctrine  that  if  their  inhabi- 
tants do  not  become,  immediately  upon  annexation,  citizens  of  the 
United  States,  their  children  thereafter  born,  whether  savages  or 
civilized,  are  such,  and  entitled  to  all  the  rights,  privileges  and  im- 
munities of  citizens.  If  such  be  their  status,  the  consequences  will 
be  extremely  serious.  Indeed,  it  is  doubtful  if  Congress  would  ever 
assent  to  the  annexation  of  territory  upon  the  condition  that  its  in- 
habitants, however  foreign  they  may  be  to  our  habits,  traditions  and 
modes  of  life,  shall  become  at  once  citizens  of  the  United  States. 
In  all  its  treaties  hitherto  the  treaty-making  power  has  made  special 
provision  for  this  subject ;  in  the  cases  of  Louisiana  and  Florida,  by 
stipulating  that  "the  inhabitants  shall  be  incorporated  into  the 
Union  of  the  United  States  and  admitted  as  soon  as  possible  *  *  * 
to  the  enjoyment  of  all  the  rights,  advantages  and  immunities  of  cit- 
izens of  the  United  States ;"  in  the  case  of  Mexico,  that  they  should 
"be  incorporated  into  the  Union,  and  be  admitted  at  the  proper  time 
(to  be  judged  of  by  the  Congress  of  the  United  States),  to  the  en- 
joyment of  all  the  rights  of  citizens  of  the  United  States ;"  in  the 
case  of  Alaska,  that  the  inhabitants  who  remained  three  years,  "with 
the  exception  of  uncivilized  native  tribes,  shall  be  admitted  to  the 
enjoyment  of  all  the  rights,"  etc. ;  and  in  the  case  of  Porto  Rico  and 
the  Philippines,  "that  the  civil  rights  and  political  status  of  the  na- 
tive inhabitants  *  *  *  *  shall  be  determined  by  Congress."  In  all 
these  cases  there  is  an  implied  denial  of  the  right  of  the  inhabitants 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  243 

to  American  citizenship  until  Congress  by  further  action  shall  sig- 
nify its  assent  thereto.  *  *  *  * 

We  are  therefore  of  opinion  that  the  Island  of  Porto  Rico  is  a  ter- 
ritory appurtenant  and  belonging  to  the  United  States,  but  not  a  part 
of  the  United  States  within  the  revenue  clauses  of  the  Constitution ; 
that  the  Foraker  Act  is  constitutional,  so  far  as  it  imposes  duties 
upon  imports  from  such  island,  and  that  the  plaintiff  cannot  recover 
back  the  duties  exacted  in  this  case. 

The  judgment  of  the  Circuit  Court  is  therefore          Affirmed. 

NOTE.  There  were  a  number  of  separate  opinions  delivered  by  the  justices. 
Those  who  concurred  in  the  majority  judgment  came  to  the  same  conclusion 
of  Mr.  Justice  Brown,  but  by  a  different  line  of  reasoning.  For  example, 
Justices  White,  Shiras  and  McKenna  held  that  until  Congress  has  formally 
incorporated  the  territory  into  the  United  States,  the  various  provisions  of 
the  Constitution  are  inapplicable  thereto,  as  otherwise,  so  far  as  fiscal  matters 
are  concerned,  the  action  of  the  treaty  making  power  could  override  the  will 
of  Congress. 

The  four  justices  who  dissented  held  that  uniformity  of  taxation  means 
geographical  uniformity  throughout  the  United  States  and  that  the  phrase 
"the  United  States"  includes  the  territories  as  well  as  the  States. 


DOOLEY  v.  UNITED  STATES. 
183  U.  S.,  151.     1901. 

The  Foraker  Act  required  that  all  merchandise  going  into  Porto 
Rico  from  the  United  States  should  be  subject  to  a  duty  of  15  per 
cent  of  the  amount  of  duties  paid  upon  similar  merchandise  im- 
ported from  foreign  countries.  Dooley,  Smith  and  Company  im- 
ported certain  merchandise  into  Porto  Rico  from  New  York.  They 
paid  the  duties  under  protest  and  brought  suit  in  the  Circuit  Court 
to  recover  them  back  on  the  ground  that  the  Foraker  Act  was  un- 
constitutional, being  repugnant  to  the  clause  in  the  Constitution  de- 
claring "no  tax  or  duty  shall  be  laid  on  articles  exported  from  any 
State."  The  Circuit  Court  decided  that  the  duties  were  properly 
collected,  whereupon  Dooley,  Smith  and  Company  appealed  the  case 
to  the  United  States  Supreme  Court. 

MR.  JUSTICE  BROWN  delivered  the  opinion  of  the  court. 

While  the  words  "import"  and  "export"  are  sometimes  used  to 
denote  goods  passing  from  one  State  to  another,  the  word  "im- 
port," in  connection  with  the  provision  of  the  Constitution  that  "no 
State  shall  levy  any  imposts  or  duties  on  imports  or  exports,"  was 
held  in  Woodruff  v.  Parkham,  8  Wall,  123,  to  apply  only  to  articles 
imported  from  foreign  countries  into  the  United  States.  *  *  *  * 


244  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

In  discussing  this  question,  and  particularly  of  the  power  of 
Congress  to  levy  and  collect  taxes,  duties,  imposts,  and  excises, 
Mr.  Justice  Miller  observed :  "Is  the  word  'impost/  here  used, 
intended  to  confer  upon  Congress  a  distinct  power  to  levy  a  tax 
upon  all  goods  or  merchandise  carried  from  one  State  to  another? 
Or  is  the  power  limited  to  duties  on  foreign  imports?  If  the 
former  be  intended,  then  the  power  conferred  is  curiously  rendered 
nugatory  by  the  subsequent  clause  of  the  ninth  section  which  de- 
clares that  no  tax  shall  be  laid  on  articles  exported  from  any  State, 
for  no  article  can  be  imported  from  one  State  into  another  which 
is  not  at  the  same  time  exported  from  the  former.  But  if  we 
give  to  the  word  'imposts'  as  used  in  the  first  mentioned  clause, 
the  definition  of  Chief  Justice  Marshall,  and  to  the  word  'export* 
the  corresponding  idea  of  something  carried  out  of  the  United 
States,  we  have,  in  the  power  to  lay  duties  on  imports  from  abroad, 
and  the  prohibition  to  lay  such  duties  on  exports  to  other  countries 
the  power  and  its  limitations  concerning  imports." 

It  follows,  and  is  the  logical  sequence  of  the  case  of  Woodruff 
v.  Parkham,  that  the  word  "export"  should  be  given  a  correlative 
meaning  and  applied  only  to  goods  exported  to  a  foreign  country. 
Muller  v.  Baldwin,  L.  R.  9  Q.  B.  457.  If,  then,  Porto  Rico  be  no 
longer  a  foreign  country  under  the  Dingley  Act,  as  was  held  by 
a  majority  of  this  court  in  De  Lima  v.  Bidwell,  182  U.  S.  1,  and 
Dooley  v.  United  States,  182  U.  S.  222,  we  find  it  impossible  to 
say  that  goods  carried  from  New  York  to  Porto  Rico  can  be  con- 
sidered as  "exported"  from  New  York  within  the  meaning  of 
that  clause  of  the  Constitution.  If  they  are  neither  exports  nor 
imports,  they  are  still  liable  to  be  taxed  by  Congress  under  the 
ample  and  comprehensive  authority  conferred  by  the  Constitution 
"to  lay  and  collect  taxes,  duties,  imposts  and  excises."  Art.  1, 
sec.  8.  *  *  *  * 

These  duties  were  properly  collected,  and  the  action  of  the  Circuit 
Court  in  sustaining  the  demurrer  to  the  complaint  was  correct,  and 
it  is  therefore  Affirmed. 


Sub-Section  B. 
THE  EXTENSION   OF   THE   CONSTITUTION   TO   THE   TERRITORIES. 

MORMON  CHURCH  v.  UNITED  STATES. 
136  U.  S,  1.     1890. 

By  virtue  of  an  express  reservation  in  the  organic  act  of  the 
Territory  of  Utah  of  the  power  to  disapprove  and  annul  the  acts 
of  its  legislature,  Congress  on  February  19th,  1887,  repealed  the  act 
of  incorporation  of  the  Church  of  Jesus  Christ  of  Later  Day 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  245 

Saints  (The  Mormon  Church),  for  the  reason  that  one  of  the 
principal  objects  of  the  Mormon  Church  was  the  promotion  and 
practice  of  polygamy,  which  was  prohibited  by  the  laws  of  the 
United  States. 

In  a  proceeding  under  the  Act  of  February  19,  1887,  the  Su- 
preme Court  of  the  Territory  of  Utah  decreed  that  the  Corpora- 
tion of  the  Church  of  Christ  of  Later  Day  Saints  was  dissolved, 
whereupon  the  Church  appealed  to  the  Supreme  Court  of  the 
United  States,  contending  that  Congress  had  no  power  to  pass  the 
Act  of  1887. 

MR.  JUSTICE  BRADLEY  delivered  the  opinion  of  the  court. 

Doubtless  Congress,  in  legislating  for  the  Territories,  would  be 
subject  to  those  fundamental  limitations  in  favor  of  personal  rights 
which  are  formulated  in  the  Constitution  and  its  amendments;  but 
these  limitations  would  exist  rather  by  inference  and  the  general 
spirit  of  the  Constitution  from  which  Congress  derives  all  its 
powers,  than  by  any  express  and  direct  application  of  its  provisions. 
The  supreme  power  of  Congress  over  the  Territories  and  over  the 
acts  of  the  territorial  legislatures  established  therein  is  generally 
expressly  reserved  in  the  organic  acts  establishing  governments  in 
said  Territories.  This  i^  true  of  the  Territory  of  Utah.  In  the 
sixth  section  of  the  act  establishing  a  territorial  government  in 
Utah,  approved  September  9,  1850,  it  is  declared  that  the  legislative 
powers  of  said  Territory  shall  extend  to  all  rightful  subjects  of 
legislation,  consistent  with  the  Constitution  of  the  United  States 
and  the  provisions  of  this  act.  *  *  *  *  All  the  laws  passed 
by  the  legislative  assembly  and  governor  shall  be  submitted  to  the 
Congress  of  the  United  States,  and  if  disapproved  shall  be  null 
and  of  no  effect.  9  Stat.  454. 

The  decree  of  the  Supreme  Court  of  Utah  is  affirmed. 


HAWAII  v.  MANKICHI. 
190  U.  S.,  197.     1903. 

This  was  a  petition  by  Mankichi  for  a  writ  of  habeas  corpus  to 
obtain  his  release  from  the  Oahu  convict  prison,  in  Hawaii,  where 
he  was  confined  upon  conviction  for  manslaughter.  He  alleged  a 
violation  of  the  Constitution  in  that  he  was  tried  upon  an  indictment 
not  found  by  a  grand  jury,  and  convicted  by  the  verdict  of  nine  out 
of  twelve  jurors,  the  other  three  dissenting  from  the  verdict.  In 
support  of  his  contention,  Mankichi  cited  the  Newlands  Resolution 
of  July  7,  1898,  annexing  Hawaii,  which  provided  that,  "The 
municipal  legislation  of  the  Hawaiian  Islands,  not  contrary  to  the 
Constitution  of  the  United  States,  shall  remain  in  force  until  the 
Congress  of  the  United  States  shall  otherwise  determine."  Man- 


246  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

kichi's  conviction  was  in  accord  with  the  municipal  law  of  Hawaii, 
but  he  claimed  this  law  violated  Article  V  of  the  Amendments  to 
the  Constitution,  which  provides  that  "No  person  shall  be  held 
to  answer  for  a  capital,  or  otherwise  infamous  crime,  unless  on  a 
presentment  or  indictment  of  a  grand  jury,"  and  Article  VI  of 
the  Amendments,  which  provides  that  "In  all  criminal  prosecutions 
the  accused  shall  enjoy  the  right  to  a  speedy  and  public  trial,  by 
an  impartial  jury  of  the  State  and  district  wherein  the  crime  shall 
have  been  committed."  The  Supreme  Court  has  interpreted  this 
clause  in  regard  to  a  jury  trial  to  mean  a  trial  by  a  common  law 
jury  of  twelve  men  who  shall  render  an  unanimous  verdict.  From 
an  order  of  the  United  States  District  Court  discharging  the  pris- 
oner the  Attorney-General  of  the  Territory  appealed  to  the  Supreme 
Court  of  the  United  States. 

MR.  JUSTICE  BROWN  delivered  the  opinion  of  the  court. 

If  the  negative  words  of  the  resolution,  "nor  contrary  to  the  Con- 
stitution of  the  United  States,"  be  construed  as  imposing  upon 
the  islands,  every  provision  of  the  Constitution,  which  must  have 
been  unfamiliar  to  a  large  number  of  their  inhabitants,  and  for 
which  no  previous  preparation  had  been  made,  the  consequences 
in  this  particular  connection  would  be  that  every  criminal  in  the 
Hawaiian  Islands  convicted  of  an  infamous  offense  between  August 
12,  1898,  and  June  14,  1900,  when  the  act  organizing  the  territorial 
government  took  effect,  must  be  set  at  large;  and  every  verdict  in 
a  civil  case  rendered  by  less  than  a  unanimous  jury  held  for 
naught.  Surely  such  a  result  could  not  have  been  within  the  con- 
templation of  Congress.  It  is  equally  manifest  that  such  could 
not  have  been  the  intention  of  the  Republic  of  Hawaii  in  surrender- 
ing its  autonomy.  Until  then  it  was  an  independent  nation,  exer- 
cising all  the  powers  and  prerogatives  of  complete  sovereignty. 
It  certainly  could  not  have  anticipated  that,  in  dealing  with  another 
independent  nation,  and  yielding  up  its  sovereignty,  it  had  denuded 
itself  by  a  negative  pregnant,  of  all  power  of  enforcing  its  criminal 
laws  according  to  the  methods  which  had  been  in  vogue  for  sixty 
years,  and  was  adopting  a  new  procedure  for  which  it  had  had  no 
opportunity  of  making  preparations.  *  *  *  * 

It  is  not  intended  here  to  decide  that  the  words  "nor  contrary  to 
the  Constitution  of  the  United  States,"  are  meaningless.  Clearly 
they  would  be  operative  upon  any  municipal  legislation  thereafter 
adopted,  and  upon  any  proceedings  thereafter  had,  when  the  applica- 
tion of  the  Constitution  would  not  result  in  the  destruction  of 
existing  conditions  conducive  to  the  peace  and  good  order  of  the 
community.  Therefore  we  should  answer  without  hesitation  in 
the  negative  the  question  put  by  counsel  for  the  petitioner  in  their 
brief:  "Would  the  municipal  status  of  Hawaii,  allowing  a  convic- 
tion of  treason  on  circumstantial  evidence,  or  the  testimony  of  one 
witness,  depriving  a  person  of  liberty  by  the  will  of  the  legisla- 
ture and  without  process,  or  confiscating  private  property  for  public 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  247 

use  without  compensation,  remain  in  force  after  the  annexation  of 
the  Territory  to  the  United  States,  which  was  conditioned  upon 
the  extinction  of  all  legislation  contrary  to  the  Constitution?"  We 
would  go  even  farther,  and  say  that  most,  if  not  all,  the  privileges 
and  immunities  contained  in  the  bill  of  rights  of  the  Constitution 
were  intended  to  apply  from  the  moment  of  annexation;  but  we 
place  our  decision  of  this  case  upon  the  ground  that  the  two  rights 
alleged  to  be  violated  in  this  case  are  not  fundamental  in  their 
nature,  but  concern  merely  a  method  of  procedure  which  sixty 
years  of  practice  had  shown  to  be  suited  to  the  conditions  of  the 
islands,  and  well  calculated  to  conserve  the  rights  of  their  citizens 
to  their  lives,  their  property,  and  their  well  being. 

The  decree  of  the  District  Court  for  the  Territory  of  Hawaii 
must  be  reversed,  and  the  case  remanded  to  that  court  with 
instructions  to  dismiss  the  petition. 

Note.— In  Rassmusen  v.  U.  S.,  197  U.  S.  516,  the  Supreme  Court  held  that 
trial  by  jury  is  a  constitutional  incident  to  judicial  procedure  in  'Alaska 
because  under  the  terms  of  the  treaty  and  by  subsequent  act  of  Congress 
Alaska  has  been  incorporated  into  the  United  States. 


GONZALES  v.  WILLIAMS. 
192  U.  S.,  1.     1904. 

This  was  an  appeal  by  Isabella  Gonzales  from  an  order  of  the 
Circuit  Court  of  the  United  States  for  the  Southern  District  of 
New  York,  dismissing  a  writ  of  habeas  corpus  issued  on  her  behalf  r 
to  secure  her  release  from  the  custody  of  the  United  States  Com- 
missioner of  Immigration  at  the  port  of  New  York.  It  appeared 
that  Isabella  Gonzales,  an  unmarried  woman,  was  born  and  resided 
in  Porto  Rico,  and  was  an  inhabitant  thereof  on  April  11,  1899, 
the  date  of  the  proclamation  of  the  treaty  of  Paris;  she  arrived 
at  the  port  of  New  York  from  Porto  Rico,  August  24,  1902,  when 
she  was  prevented  from  landing  and  detained  as  "an  alien  immi- 
grant," in  order  that  she  might  be  returned  to  Porto  Rico  if  it 
appeared  that  she  was  likely  to  become  a  public  charge.  If  she 
was  not  an  alien  immigrant  within  the  intent  and  meaning  of  the 
Act  of  Congress  (Act  March  3,  1891,  relative  to  immigration)  the 
commissioner  had  no  power  to  detain  or  deport  her. 

MR.  CHIEF  JUSTICE  FULLER  delivered  the  opinion. 

*  *  *  *  The  treaty  ceding  Porto  Rico  to  the  United  States 
was  ratified  by  the  Senate,  February  6,  1899 ;  Congress  passed  an 
act  to  carry  out  its  obligations  March  2,  1899 ;  and  the  ratifications 
were  exchanged  and  the  treaty  proclaimed  April  11,  1899.  Then 
followed  an  act  entitled  "An  act  temporarily  to  provide  remedies 


248  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

and   civil  government   for   Porto   Rico,   and   for   other   purposes," 
approved  April  12,  1900.     *     *     *     *  ' 

By  section  7  the  inhabitants  of  Porto  Rico,  who  were  Spanish 
subjects  on  the  day  the  treaty  was  proclaimed,  including  Spaniards 
of  the  Peninsula  who  had  not  elected  to  preserve  their  allegiance 
to  the  Spanish  Crown,  were  to  be  deemed  citizens  of  Porto  Rico, 
and  they  and  citizens  of  the  United  States  residing  in  Porto  Rico 
were  constituted  a  body  politic  under  the  name  of  the  People  of 
Porto  Rico.  Gonzales  was  a  native  inhabitant  of  Porto  Rico  and 
a  Spanish  subject,  though  not  of  the  Peninsula,  when  the  cession 
transferred  her  allegiance  to  the  United  States,  and  she  was  a 
citizen  of  Porto  Rico  under  the  act.  And  there  was  nothing  ex- 
pressed in  the  act,  nor  reasonably  to  be  implied  therefrom  to  indi- 
cate the  intention  of  Congress  that  citizens  of  Porto  Rico  should 
be  considered  as  aliens  and  the  right  of  free  access  denied  to  them. 
Counsel  for  the  government  contends  that  the  test  of  Gonzales' 
rights  was  citizenship  of  the  United  States,  and  not  alienage.  We 
do  not  think  so,  and  on  the  contrary,  are  of  opinion  that  if  Gonzales 
was  not  an  alien  within  the  act  of  1891,  the  order  below  was  erron- 
eous, *  *  *  *  We  cannot  concede,  in  view  of  the  language  of 
the  treaty  and  of  the  act  of  April  12,  1900,  that  the  word  "alien" 
so  used  in  the  act  of  1891,  embraces  the  citizens  of  Porto  Rico. 
We  are  not  required  to  discuss  the  power  of  Congress  in  the 
premises ;  or  the  contention  of  Gonzales'  counsel  that  the  cession 
of  Porto  Rico  accomplished  the  naturalization  of  its  people;  or 
that  of  Commissioner  Degatau,  in  his  excellent  argument  as  amicus 
curiae,  that  a  citizen  of  Porto  Rico,  under  the  Act  of  1900  is 
necessarily  a  citizen  of  the  United  States.  The  question  is  the 
narrow  one  whether  Gonzales  was  an  alien  within  the  meaning  of 
that  term  as  used  in  the  Act  of  1891.  *  *  *  * 

Fined  order  reversed  and  cause  remanded  with  a  direction  to  dis- 
charge Gonzales. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  249 

Section  6 
THE  IMPLIED  POWERS  OF  CONGRESS. 

Sub-Section  A. 
THE   EXCLUSION   OF   FOREIGNERS. 

THE  CHINESE  EXCLUSION  CASE. 

CHAE  CHANG  PING  v.  UNITED  STATES. 

130  U.  S.,  581.     1889. 

The  facts  are  sufficiently  stated  in  the  opinion  of  the  court. 
MR.  CHIEF  JUSTICE  FIELD  delivered  the  opinion  of  the  court. 

The  appellant,  Chae  Chang  Ping,  was  a  subject  of  the  Emperor  of 
China  and  a  laborer  by  occupation.  He  resided  at  San  Francisco, 
California,  following  his  occupation,  from  some  time  in  1875  until 
June  2,  1887,  when  he  left  for  China  on  the  steamship  "Gaelic," 
having  in  his  possession  a  certificate,  in  terms  entitling  him  to  return 
to  the  United  States,  bearing  date  on  that  day,  duly  issued  to  him 
by  the  Collector  of  Customs  of  the  port  of  San  Francisco,  pursuant 
to  the  provisions  of  section  four  of  the  restriction  act  of  May  6, 
1882,  as  amended  by  the  Act  of  July  5,  1884. 

On  the  7th  of  September,  1888,  the  appellant,  on  his  return  to 
California,  sailed  from  Hong  Kong  in  the  steamship  "Belgic,"  which 
arrived  within  the  port  of  San  Francisco  on  the  8th  of  October 
following.  On  his  arrival  he  presented  to  the  proper  custom-house 
officer  his  certificate  and  demanded  permission  to  land,  the  Col- 
lector of  the  port  refused  the  permit,  solely  on  the  ground  that 
under  the  Act  of  Congress,  approved  October  1,  1888,  supple- 
mentary to  the  restriction  acts  of  1882  and  1884,  the  certificate  had 
been  annulled  and  his  right  to  land  abrogated,  and  he  had  been 
thereby  forbidden  again  to  enter  the  United  States.  The  captain 
of  the  steamship,  therefore,  detained  the  appellant  on  board  the 
steamer.  Thereupon  a  petition  on  his  behalf  was  presented  to  the 
Circuit  Court  of  the  United  States  for  the  Northern  District  of 
California,  alleging  that  he  was  unlawfully  restrained  of  his  liberty, 
and  praying  that  a  writ  of  habeas  corpus  might  be  issued  directed 
to  the  master  of  the  steamship,  commanding  him  to  have  the  ap- 
pellant, with  the  cause  of  his  detention,  before  the  court  for  a 
hearing.  Upon  the  hearing  which  followed,  the  court  held  that  the 
appellant  was  not  entitled  to  enter  the  United  States,  and  was  not 

Note. — See  Appendix  for  the  Immigration  Law  of  the  United  States. 


Pfcturn  to 

.„-!-,,>-»«.  i  »  i     nr~i 


25°  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

unlawfully  restrained  of  his  liberty,  and  ordered  that  he  be  re- 
manded to  the  custody  of  the  master  of  the  steamship  from  which 
he  had  been  taken  under  the  writ.  From  this  order  an  appeal  was 
taken  to  this  court. 

The  appeal  involves  a  consideration  of  the  validity  of  the  Act  of 
Congress  of  October  1,  1888,  prohibiting  Chinese  laborers  from 
entering  the  United  States  who  had  departed  before  its  passage, 
having  a  certificate  issued  under  the  act  of  1882  as  amended  by  the 
act  of  1884,  granting  them  permission  to  return.  The  validity  of 
the  act  is  assailed  as  being  in  effect  an  expulsion  from  the  country 
of  Chinese  laborers,  in  violation  of  existing  treaties  between  the 
United  States  and  the  government  of  China,  and  of  rights  vested 
in  them  under  the  laws  of  Congress.  *  *  *  * 

There  being  nothing  in  the  treaties  between  China  and  the  United 
States  to  impair  the  validity  of  the  Act  of  Congress  of  October  1, 
1888,  was  it  on  any  other  ground  beyond  the  competency  of  Con- 
gress to  pass  it?  If  so,  it  must  be  because  it  was  not  within  the 
power  of  Congress  to  prohibit  Chinese  laborers  who  had  at  the 
time  departed  from  the  United  States,  or  should  subsequently 
depart,  from  returning  to  the  United  States.  Those  laborers  are 
not  citizens  of  the  United  States ;  they  are  aliens.  That  the  gov- 
ernment of  the  United  States,  through  the  action  of  the  legislative 
department,  can  exclude  aliens  from  its  territory  is  a  proposition 
which  we  do  not  think  open  to  controversy.  Jurisdiction  over  its 
own  territory  to  that  extent  is  an  incident  of  every  independent 
nation.  It  is  a  part  of  its  independence.  If  it  could  not  exclude 
aliens  it  would  be  to  that  extent  subject  to  the  control  of  another 
power.  *  *  *  * 

The  power  of  exclusion  of  foreigners  being  an  incident  of  sover- 
eignty belonging  to  the  government  of  the  United  States,  as  a  part 
of  those  sovereign  powers  delegated  by  the  Constitution,  the  right 
to  its  exercise  at  any  time  when,  in  the  judgment  of  the  govern- 
ment, the  interests  o'f  the  country  require  it,  cannot  be  granted 
away  or  restrained  on  behalf  of  any  one.  The  powers  of  govern- 
ment are  delegated  in  trust  to  the  United  States,  and  are  incapable 
of  transfer  to  any  other  parties.  They  cannot  be  abandoned  or 
surrendered.  Nor  can  their  exercise  be  hampered,  when  needed 
for  the  public  good,  by  any  considerations  of  private  interest.  The 
exercise  of  these  public  trusts  is  not  the  subject  of  barter  or  con- 
tract. Whatever  license,  therefore,  Chinese  laborers  may  have  ob- 
tained, previous  to  the  act  of  October  1,  1888,  to  return  to  the 
United  States  after  their  departure,  is  held  at  the  will  of  the 
government,  revocable  at  any  time,  at  its  pleasure.  Whether  a 
proper  consideration  by  our  government  of  its  previous  laws,  or  a 
proper  respect  for  the  nation  whose  subjects  are  affected  by  its 
action,  ought  to  have  qualified  its  inhibition  and  made  it  applicable 
only  to  persons  departing  from  the  country  after  the  passage  of  the 
act,  are  not  questions  for  judicial  determination.  If  there  be  any 
just  ground  of  complaint  on  the  part  of  China,  it  must  be  made  to 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  251 

the  political  department  of  our  government,  which  is  alone  com- 
petent to  act  upon  the  subject.  The  rights  and  interests  created  by 
a  treaty,  which  have  become  so  vested  that  its  expiration  or  abroga- 
tion will  not  destroy  or  impair  them,  are  such  as  are  connected 
with  and  lie  in  property,  capable  of  sale  and  transfer  or  other 
disposition,  not  such  as  are  personal  and  untransferable  in  their 
character.  *  *  *  *  Order  affirmed. 


Sub-Section  B. 
THE  RIGHT  OF  EMINENT  DOMAIN. 

KOHL  v.  UNITED  STATES. 
91  U.  S.,  367.     1875. 

Congress  by  act  of  March  2,  1872,  authorized  the  Secretary  of 
the  Treasury  to  purchase  in  the  City  of  Cincinnati  a  suitable  site  for 
a  building  for  the  accommodation  of  the  United  States  post  office 
and  for  other  public  purposes,  and  by  a  subsequent  act  made  an 
appropriation  "for  the  purchase  at  private  sale  or  by  condemnation 
of  such  site."  Pursuant  to  this  act  a  proceeding  was  instituted 
in  the  Circuit  Court  by  the  United  States  to  appropriate  a  certain 
parcel  of  land  in  the  city  of  Cincinnati  as  a  site  for  a  post  office. 
The  owners  of  the  property  sought  to  be  appropriated  moved  to 
dismiss  the  proceeding  on  the  ground  that  Congress  did  not  under 
the  Constitution  have  the  right  of  eminent  domain.  The  Circuit 
Court  gave  judgment  for  the  United  States.  An  appeal  was  taken 
to  the  United  States  Supreme  Court. 

MR.  JUSTICE  STRONG  delivered  the  opinion  of  the  court. 

It  has  not  been  seriously  contended  during  the  argument  that  the 
United  States  Government  is  without  power  to  appropriate  lands  or 
other  property  within  the  States  for  its  own  use,  and  to  enable 
it  to  perform  its  proper  functions.  Such  an  authority  is  essential 
to  its  independent  existence  and  perpetuity.  These  cannot  be  pre- 
served if  the  obstinacy  of  a  private  person,  or  if  any  other  authority, 
can  prevent  the  acquisition  of  the  means  or  instruments  by  which 
alone  governmental  functions  can  be  performed.  The  powers 
vested  by  the  Constitution  in  the  general  government  demand  for 
their  exercise  the  acquisition  of  lands  in  all  the  States.  These  are 
needed  for  forts,  armories,  and  arsenals,  for  navy-yards  and  light- 
houses, for  custom-houses,  post-offices,  and  court-houses,  and  for 
other  public  uses.  If  the  right  to  acquire  property  for  such  uses 
may  be  made  a  barren  right  by  the  unwillingness  of  property-holders 
to  sell,  or  by  the  action  of  a  State  prohibiting  a  sale  to  the  Federal 


252  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

government,  the  constitutional  grants  of  power  may  be  rendered 
nugatory,  and  the  government  is  dependent  for  its  practical  exist- 
ence upon  the  will  of  a  State,  or  even  upon  that  of  a  private  citizen. 
This  cannot  be.  No  one  doubts  the  existence  in  the  State  govern- 
ments of  the  right  of  eminent  domain, — a  right  distinct  from  and 
paramount  to  the  right  of  ultimate  ownership.  It  grows  out  of 
the  necessities  of  their  being,  not  out  of  the  tenure  by  which  lands 
are  held.  It  may  be  exercised,  though  the  lands  are  not  held  by 
grant  from  the  government,  either  mediately  or  immediately,  and 
independent  of  the  consideration  whether  they  would  escheat  to 
the  government  in  case  of  a  failure  of  heirs.  The  right  is  the  off- 
spring of  political  necessity ;  and  it  is  inseparable  from  sovereignty, 
unless  denied  to  it  by  its  fundamental  law.  But  it  is  no  more 
necessary  for  the  exercise  of  the  powers  of  a  State  government  than 
it  is  for  the  exercise  of  the  conceded  powers  of  the  Federal  gov- 
ernment. That  government  is  as  sovereign  within  its  sphere  as 
the  States  are  within  theirs.  True,  its  sphere  is  limited.  Certain 
subjects  only  are  committed  to  it,  but  its  power  over  those  subjects 
is  as  full  and  complete  as  is  the  power  of  the  States  over  the 
subjects  to  which  their  sovereignty  extends.  The  power  is  not 
changed  by  its  transfer  to  another  holder. 

But,  if  the  right  of  eminent  domain  exists  in  the  Federal  gov- 
ernment, it  is  a  right  which  may  be  exercised  within  the  States,  so 
far  as  is  necessary  to  the  enjoyment  of  the  powers  conferred  upon 
it  by  the  Constitution.  In  Albeman  v.  Booth,  21  How.  523,  Chief 
Justice  Taney  described  in  plain  language  the  complex  nature  of 
our  government,  and  the  existence  of  two  distinct  and  separate  sov- 
ereignties within  the  same  territorial  space,  each  of  them  restricted 
in  its  powers,  and  each,  within  its  sphere  of  action  prescribed  by 
the  Constitution  of  the  United  States,  independent  of  the  other. 
Neither  is  under  the  necessity  of  applying  to  the  other  for  permis- 
sion to  exercise  its  lawful  powers.  Within  its  own  sphere,  it  may 
employ  all  the  agencies  for  exerting  them  which  are  appropriate  or 
necessary,  and  which  are  not  forbidden  by  the  law  of  its  being. 
When  the  power  to  establish  post-offices  and  to  create  courts  within 
the  States  was  conferred  upon  the  Federal  government,  included  in 
it  was  authority  to  obtain  sites  for  such  offices  and  for  court-houses, 
and  to  obtain  them  by  such  means  as  were  known  and  appropriate. 
The  right  of  eminent  domain  was  one  of  those  means  well  known 
when  the  Constitution  was  adopted,  and  employed  to  obtain  lands 
for  public  uses.  Its  existence,  therefore,  in  the  grantee  of  that 
power,  ought  not  to  be  questioned.  The  Constitution  itself  contains 
an  implied  recognition  of  it  beyond  what  may  justly  be  implied 
from  the  express  grants.  The  Fifth  Amendment  contains  a  pro- 
vision that  private  property  shall  not  be  taken  for  public  use  with- 
out just  compensation.  What  is  that  but  an  implied  assertion,  that, 
on  making  just  compensation,  it  may  be  taken?  *  *  *  * 

It  is  true,  this  power  of  the  Federal  government  has  not  hereto- 
fore been  exercised  adversely ;  but  the  non-user  of  a  power  does  not 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  253 

disprove  its  existence.  In  some  instances,  the  States,  by  virtue  of 
their  own  right  of  eminent  domain,  have  condemned  lands  for  the 
use  of  the  general  government,  and  such  condemnations  have  been 
sustained  by  their  courts,  without,  however,  denying  the  right  of  the 
United  States  to  act  independently  of  the  States.  *  *  *  *  The 
proper  view  of  the  right  of  eminent  domain  seems  to  be  that  it  is  a 
right  belonging  to  a  sovereignty  to  take  private  property  for  its 
own  public  uses,  and  not  for  those  of  another.  Beyond  that,  there 
exists  no  necessity;  which  alone  is  the  foundation  of  the  right.  If 
the  United  States  have  the  power,  it  must  be  complete  in  itself.  It 
can  neither  be  enlarged  nor  diminished  by  a  State.  Nor  can  any 
State  prescribe  the  manner  in  which  it  must  be  exercised.  The 
consent  of  a  State  can  never  be  a  condition  precedent  to  its  enjoy- 
ment. Such  consent  is  needed  only,  if  at  all,  for  the  transfer  of 
jurisdiction  and  of  the  right  of  exclusive  legislation  after  the  land 
shall  have  been  acquired. 

The  judgment  of  the  lower  court  is  affirmed. 


Sub-Section  C. 

THE  POWER  TO  MAKE  ALL  LAWS  NECESSARY  AND  PROPER  FOR 
CARRYING  INTO  EXECUTION  THE  ENUMERATED  POWERS. 


50. 
72. 


McCulloch  v.  Maryland.     See  page 
Gibbons  v.  Ogden.     See  page  72. 
Julliard  v.  Greenman.    See  page  232. 

Section  7. 
RESTRICTIONS  ON  THE  POWERS  OF  CONGRESS. 

Sub-Section  A. 
THE  BILL  OF  RIGHTS. 

BARRON  v.  BALTIMORE. 
7  PET.  243.     1833. 

Barren  brought  suit  against  the  City  of  Baltimore  to  recover 
damages  for  injuries  to  certain  wharf  property  owned  by  him  in 
Baltimore.  The  value  of  his  deep  water  wharf  had  been  destroyed 
by  a  sand  bar  created  in  front  it,  in  consequence  of  a  change  of 
water  currents  in  the  harbor.  It  appeared  that  the  City  of  Balti- 


254  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

more  in  the  exercise  of  its  corporate  authority  over  paving  and 
grading  of  streets  and  over  the  health  of  its  inhabitants  had  diverted 
certain  streams  of  water  from  their  natural  and  accustomed  course 
and  caused  them  to  flow  into  the  harbor  in  such  a  way  as  to  deposit 
sand  in  front  of  Barren's  wharf.  Barron  could  get  no  redress  in 
the  State  courts  and  took  an  appeal  to  the  Federal  courts,  carrying 
his  case  to  the  Supreme  Court  of  the  United  States,  alleging  a  viola- 
tion of  Article  V  of  the  amendments  to  the  Constitution  of  the 
United  States,  which  declares  that  "private  property  shall  not  be 
taken  for  public  use  without  just  compensation." 

MARSHALL,  C.  J.,  delivered  the  opinion  of  the  court. 

*  *  *  *  The  Constitution  was  ordained  and  established  by 
the  people  of  the  United  States  for  themselves,  for  their  own  gov- 
ernment and  not  for  the  government  of  the  individual  States.  Each 
State  established  a  constitution  for  itself,  and  in  that  constitution, 
provided  such  limitations  and  restrictions  on  the  powers  of  its  par- 
ticular government  as  its  judgment  dictated.  The  people  of  the 
United  States  framed  such  a  government  for  the  United  States  as 
they  supposed  best  adapted  to  their  situation,  and  best  calculated  to 
promote  their  interests.  The  powers  they  conferred  on  this  govern- 
ment were  to  be  exercised  by  itself ;  and  the  limitations  on  power, 
if  expressed  in  general  terms,  are  naturally,  and,  we  think,  neces- 
sarily applicable  to  the  government  created  by  the  instrument.  They 
are  limitations  of  power  granted  in  the  instrument  itself;  not  of 
distinct  governments,  framed  by  different  persons  and  for  different 
purposes. 

If  these  propositions  be  correct,  the  5th  amendment  must  be 
understood  as  restraining  the  power  of  the  general  government,  not 
as  applicable  to  the  States.  In  their  several  constitutions  they  have 
imposed  such  restrictions  on  their  respective  governments  as  their 
own  wisdom  suggested ;  such  as  they  deemed  most  proper  for  them- 
selves. It  is  a  subject  on  which  they  judge  exclusively,  and  with 
which  others  interfere  no  further  than  they  are  supposed  to  have 
a  common  interest. 

The  counsel  for  the  plaintiff  in  error  insists  that  the  Constitution 
was  intended  to  secure  the  people  of  the  several  States  against  the 
undue  exercise  of  power  by  their  respective  State  governments ;  as 
well  as  against  that  which  might  be  attempted  by  their  general 
government.  In  support  of  this  argument  he  relies  on  the  inhibi- 
tions contained  in  the  10th  section  of  the  1st  article. 

We  think  that  section  affords  a  strong  if  not  a  conclusive  argu- 
ment in  support  of  the  opinion  already  indicated  by  the  court. 

The  preceding  section  contains  restrictions  which  are  obviously 
intended  for  the  exclusive  purpose  of  restraining  the  exercise  of 
power,  by  the  departments  of  the  general  government.  Some  of 
them  use  language  applicable  to  Congress ;  others  are  expressed  in 
general  terms.  The  3d  clause,  for  example,  declares  that  "no  bill  of 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  255 

attainder  or  ex  post  facto  law  shall  be  passed."  No  language  can  be 
more  general ;  yet  the  demonstration  is  complete  that  it  applies  solely 
to  the  government  of  the  United  States.  In  addition  to  the  general 
arguments  furnished  by  the  instrument  itself,  some  of  which  have 
been  already  suggested,  the  succeeding  section,  the  avowed  purpose 
of  which  is  to  restrain  State  legislation,  contains  in  terms  the  very 
prohibition.  It  declares  that  "no  State  shall  pass  any  bill  of  at- 
tainder or  ex  post  facto  law."  This  provision,  then,  of  the  9th 
section,  however  comprehensive  its  language,  contains  no  restriction 
on  State  legislation. 

The  9th  section  having  enumerated,  in  the  nature  of  a  bill  of 
rights,  the  limitations  intended  to  be  imposed  on  the  powers  of  the 
general  government,  the  10th  proceeds  to  enumerate  those  which 
were  to  operate  on  the  State  legislatures.  These  restrictions  are 
brought  together  in  the  same  section,  and  are  by  express  words 
applied  to  the  States.  "No  State  shall  enter  into  any  treaty,"  etc. 
Perceiving  that  in  a  Constitution  framed  by  the  people  of  the  United 
States  for  the  government  of  all,  no  limitation  of  the  action  of 
government  on  the  people  would  apply  to  the  State  government, 
unless  expressed  in  terms ;  the  restrictions  contained  in  the  10th 
section  are  in  direct  words  so  applied  to  the  States. 

It  is  worthy  of  remark,  too,  that  these  inhibitions  generally  restrain 
State  legislation  on  subjects  intrusted  to  the  general  government, 
or  in  which  the  people  of  all  the  States  feel  an  interest. 

A  State  is  forbidden  to  enter  into  any  treaty,  alliance,  or  con- 
federation. If  these  compacts  are  with  foreign  nations,  they  inter- 
fere with  the  treaty-making  power,  which  is  conferred  entirely  on 
the  general  government;  if  with  each  other,  for  political  purposes, 
they  can  scarcely  fail  to  interfere  with  the  general  purpose  and 
intent  of  the  Constitution.  To  grant  letters  of  marque  and  reprisal, 
would  lead  directly  to  war;  the  power  of  declaring  which  is  ex- 
pressly given  to  Congress.  To  coin  money  is  also  the  exercise  of  a 
power  conferred  on  Congress.  It  would  be  tedious  to  recapitulate 
the  several  limitations  on  the  powers  of  the  States  which  are  con- 
tained in  this  section.  They  will  be  found,  generally,  to  restrain 
State  legislation  on  subjects  intrusted  to  the  government  of  the 
Union,  in  which  the  citizens  of  all  the  States  are  interested.  In 
these  alone  were  the  whole  people  concerned.  The  question  of 
their  application  to  States  is  not  left  to  construction.  It  is  averred 
in  positive  words. 

If  the  original  Constitution,  in  the  9th  and  10th  sections  of  the  1st 
article,  drawrs  this  plain  and  marked  line  of  discrimination  between 
the  limitations  it  imposes  on  the  powers  of  the  general  government, 
and  on  those  of  the  States ;  if  in  every  inhibition  intended  to  act  on 
State  power,  words  are  employed  which  directly  express  that  in- 
tent ;  some  strong  reason  must  be  assigned  for  departing  from  this 
safe  and  judicious  course  in  framing  the  amendments,  before  that 
departure  can  be  assumed. 


256  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

We  search  in  vain  for  that  reason. 

Had  the  people  of  the  several  States,  or  any  of  them  required 
changes  in  their  constitutions;  had  they  required  additional  safe- 
guards to  liberty  from  the  apprehended  encroachments  of  their  par- 
ticular governments ;  the  remedy  was  in  their  own  hands,  and  would 
have  been  applied  by  themselves.  -A  convention  would  have  been 
assembled  by  the  discontented  State,  and  the  required  improvements 
would  have  been  made  by  itself.  The  unwieldy  and  cumbrous 
machinery  of  procuring  a  recommendation  from  two-thirds  of  Con- 
gress, and  the  assent  of  three-fourths  of  their  sister  States,  could 
never  have  occurred  to  any  human  being  as  a  mode  of  doing  that 
which  might  be  effected  by  the  State  itself.  Had  the  framers  of 
these  amendments  intended  them  to  be  limitations  on  the  powers  of 
the  State  governments,  they  would  have  imitated  the  framers  of  the 
original  Constitution,  and  have  expressed  that  intention.  Had  Con- 
gress engaged  in  the  extraordinary  occupation  of  improving  the 
constitutions  of  the  several  States  by  affording  the  people  additional 
protection  from  the  exercise  of  power  by  their  own  governments  in 
matters  which  concerned  themselves  alone,  they  would  have  declared 
this  purpose  in  plain  and  intelligible  language. 

But  it  is  universally  understood,  it  is  a  part  of  the  history  of  the 
day,  that  the  great  revolution  which  established  the  Constitution  of 
the  United  States,  was  not  effected  without  immense  opposition. 
Serious  fears  were  extensively  entertained  that  those  powers  which 
the  patriot  statesmen,  who  then  watched  over  the  interests  of  our 
country,  deemed  essential  to  union,  and  to  the  attainment  of  those 
invaluable  objects  for  which  union  was  sought,  might  be  exercised 
in  a  manner  dangerous  to  liberty.  In  almost  every  convention  by 
which  the  constitution  was  adopted,  amendments  to  guard  against 
the  abuse  of  power  were  recommended.  These  amendments  de- 
manded security  against  the  apprehended  encroachments  of  the  gen- 
eral government,  not  against  those  of  the  local  governments. 

In  compliance  with  a  sentiment  thus  generally  expressed  to  quiet 
fears  thus  extensively  entertained,  amendments  were  proposed  by 
the  required  majority  in  Congress,  and  adopted  by  the  States.  These 
amendments  contain  no  expression  indicating  an  intention  to  apply 
them  to  the  State  governments.  This  court  cannot  apply  them. 

We  are  of  opinion  that  the  provision  in  the  fifth  amendment  to  the 
Constitution,  declaring  that  private  property  shall  not  be  taken  for 
public  use  without  just  compensation,  is  intended  solely  as  a  limita- 
tion on  the  exercise  of  power  by  the  government  of  the  United 
States,  and  is  not  applicable  to  the  legislation  of  the  States.  We 
are  therefore  of  opinion,  that  there  is  no  repugnancy  between  the 
several  acts  of  the  general  assembly  of  Maryland,  given  in  evidence 
by  the  defendants  at  the  trial  of  this  cause,  in  the  court  of  that 
State,  and  the  Constitution  of  the  United  States.  This  court,  there- 
fore, has  no  jurisdiction  of  the  cause;  and  it  is  dismissed. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  257 

Sub-Section  B. 
MEANING  OF  EX-POST-FACTO  LAWS. 

CALDER  v.  BULL. 
3  DALLAS,  386.     1798. 

One  Morrison  made  a  will  in  1779,  giving  certain  lands  in  Con- 
necticut to  the  wife  of  Bull.  The  will  was  offered  for  probate  in 
1793,  but  probate  was  refused,  and  the  wife  of  Calder,  as  Morri- 
son's heiress  at  law,  was  held  to  be  entitled  to  the  property.  Under 
the  statute  law  of  Connecticut  at  that  time  no  appeal  could  be  taken 
from  the  decree  of  the  probate  court  after  eighteen  months  had 
elapsed  from  the  date  of  the  decree.  In  1795,  more  than  two  years 
after  the  decree  refusing  probate  of  Morrison's  will  had  been  en- 
tered, the  State  legislature  passed  an  act  setting  aside  the  decree 
of  the  probate  court  and  granting  a  new  hearing  in  the  matter  of 
Morrison's  will.  The  rehearing  was  subsequently  held,  the  will 
was  admitted  to  probate  and  the  wife  of  Bull,  as  devisee,  was  de- 
clared entitled  to  the  property.  The  Supreme  Court  of  Errors  of 
Connecticut  found  that  there  was  no  error  in  the  decree  of  the 
probate  court  at  the  rehearing.  Mrs.  Calder  then  claimed  that  Mrs. 
Bull's  right  was  barred  by  the  lapse  of  eighteen  months  from  the 
date  of  the  decree  refusing  probate;  that  the  subsequent  statute 
providing  for  the  rehearing  was  an  ex  post  facto  law  and  therefore 
unconstitutional,  under  Art.  1,  Sec.  10  of  the  Constitution,  which 
provides  that  no  State  shall  pass  any  ex  post  facto  law. 

Appeal  was  taken  to  the  United  States  Supreme  Court. 
MR.  JUSTICE  CHASE  delivered  the  following  opinion: 

*  *  *  *  The  Constitution  of  the  United  States,  Art.  I,  §  9, 
prohibits  the  legislature  of  the  United  States  from  passing  any  ex 
post  facto  law ;  and  in  Sec.  10  lays  several  restrictions  on  the  author- 
ity of  the  legislatures  of  the  several  States ;  and  among  them,  "that 
no  State  shall  pass  any  ex  post  facto  law." 

I  shall  endeavor  to  show  what  law  is  to  be  considered  an  ex  post 
facto  law,  within  the  words  and  meaning  of  the  prohibition  in  the 
Federal  Constitution.  The  prohibition,  "that  no  State  shall  pass 
any  ex  post  facto  law,"  necessarily  requires  some  explanation;  for 
naked  and  without  explanation  it  is  unintelligible,  and  means  noth- 
ing. Literally,  it  is  only  that  a  law  shall  not  be  passed  concerning, 
and  after  the  fact,  or  thing  done,  or  action  committed.  *  *  *  * 

I  will  state  what  laws  I  consider  ex  post  facto  laws,  within  the 
words  and  the  intent  of  the  prohibition.  1st.  Every  law  that 
makes  an  action  done  before  the  passing  of  the  law,  and  which  was 
innocent  when  done,  criminal ;  and  punishes  such  action.  2nd. 


258  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Every  law  that  aggravates  a  crime,  or  makes  it  greater  than  it  was, 
when  committed.  3d.  Every  law  that  changes  the  punishment,  and 
inflicts  a  greater  punishment  than  the  law  annexed  to  the  crime, 
when  committed.  4th.  Every  law  that  alters  the  legal  rules  of 
evidence,  and  receives  less  or  different  testimony  than  the  law 
required  at  the  time  of  the  commission  of  the  offence,  in  order  to 
convict  the  offender.  All  these  and  similar  laws  are  manifestly 
unjust  and  oppressive.  In  my  opinion,  the  true  distinction  is  be- 
tween ex  post  facto  laws  and  retrospective  laws.  Every  ex  post 
facto  law  must  necessarily  be  retrospective,  but  every  retrospective 
law  is  not  an  ex  post  facto  law;  the  former  only  are  prohibited. 
Every  law  that  takes  away  or  impairs  rights  vested,  agreeably  to 
existing  laws,  is  retrospective,  and  is  generally  unjust,  and  may  be 
oppressive ;  and  it  is  a  good  general  rule  that  a  law  should  have  no 
retrospect;  but  there  are  cases  in  which  laws  may  justly,  and  for 
the  benefit  of  the  community,  and  also  of  individuals,  relate  to  a 
time  antecedent  to  their  commencement;  as  statutes  of  oblivion,  or 
of  pardon.  They  are  certainly  retrospective,  and  literally  both  con- 
cerning and  after  the  facts  committed.  But  I  do  not  consider  any 
law  ex  post  facto,  within  the  prohibition,  that  mollifies  the  rigor  of 
the  criminal  law ;  but  only  those  that  create,  or  aggravate,  the  crime, 
or  increase  the  punishment,  or  change  the  rules  of  evidence,  for  the 
purpose  of  conviction.  Every  law  that  is  to  have  an  operation 
before  the  making  thereof,  as  to  commence  at  an  antecedent  time, 
or  to  save  time  from  the  statute  of  limitations,  or  to  execute  acts 
which  were  unlawful,  and  before  committed,  and  the  like,  is  retro- 
spective. But  such  laws  may  be  proper  or  necessary,  as  the  case 
may  be.  There  is  a  great  and  apparent  difference  between  making 
an  unlawful  act  lawful,  and  the  making  of  innocent  action  criminal, 
and  punishing  it  as  a  crime.  The  expressions  "ex  post  facto  laws," 
are  technical,  they  had  been  in  use  long  before  the  Revolution,  and 
had  acquired  an  appropriate  meaning,  by  legislators,  lawyers,  and 
authors.  The  celebrated  and  judicious  Sir  William  Blakstone,  in 
his  Commentaries,  considers  an  ex  post  facto  law  precisely  in  the 
same  light  I  have  done.  His  opinion  is  confirmed  by  his  successor, 
Mr.  Woodeson,  and  by  the  author  of  the  Federalist,  whom  I  esteem 
superior  to  both,  for  his  extensive  and  accurate  knowledge  of  the 
true  principles  of  government. 

(The  other  judges  of  the  court  delivered  opinions  and  the  decree 
of  the  Supreme  Court  of  Errors  of  Connecticut  was  affirmed,  all 
concurring.) 

Note. — See  also  case  of  Ex  parte  Garland,  page  37. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  259 

CHAPTER  III. 

The  Judicial  Department 

Section  1. 
THE  JURISDICTION  OF  THE  SUPREME  COURT. 

Sub-Section  A. 
SUITS    BETWEEN  STATES. 

NEW  HAMPSHIRE  v.  LOUISIANA. 
NEW  YORK  v.  LOUISIANA. 

108  U.  S.,  76.     1883. 

On  the  18th  of  July,  1879,  the  Legislature  of  New  Hampshire 
passed  a  statute  which  provided  that  whenever  a  citizen  of  the 
State  should  own  a  claim  against  another  State  of  the  United  States, 
arising  upon  a  written  obligation  to  pay  money  which  should  be 
past  due  and  unpaid,  that  such  citizen  could  assign  the  claim  to  the 
State,  and  the  Attorney-General  ol  the  State  should  institute  a  pro- 
ceeding in  the  name  of  the  State  in  the  Supreme  Court  of  the  United 
State  to  recover  the  amount  due.  Under  this  act,  certain  bonds 
of  the  State  of  Louisiana  were  assigned  to  the  State  of  New  Hamp- 
shire by  one  of  its  citizens  for  the  purpose  of  suit  as  contemplated 
in  the  act.  A  similar  statute  in  New  York,  passed  May  15,  1880, 
was  the  basis  for  a  suit  upon  bonds  of  the  same  character,  assigned 
to  the  State  of  New  York  by  one  of  its  citizens.  The  two  cases 
were  heard  together. 

MR.  CHIEF  JUSTICE  WAITE  delivered  the  opinion. 

The  first  question  we  have  to  settle  is  whether,  upon  the  facts 
shown,  these  suits  can  be  maintained  in  this  court. 

Art.  Ill,  Sec.  2,  of  the  Constitution  provides  that  the  judicial 
power  of  the  United  States  shall  extend  to  "controversies  between 
two  or  more  States,"  and  "between  a  State  and  a  citizen  of  another 
State."  By  the  same  article  and  section  it  is  also  provided  that  in 
cases  "in  which  a  State  shall  be  a  party,  the  Supreme  Court  shall 
have  original  jurisdiction."  By  the  Judiciary  Act  of  1789,  c.  20, 
Sec.  13,  1  Stat.  80,  the  Supreme  Court  was  given  "exclusive  jurisdic- 
tion of  all  controversies  of  a  civil  nature,  where  a  State  is  a  party, 
except  between  a  State  and  its  citizens ;  and  except  also  between  a 

Note. — See  Appendix  for  digest  of  the  new  Federal  Judicial  Code,  showing 
the  organization  and  jurisdiction  of  the  various  federal  courts. 


26o  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

State  and  citizens  of  another  State,  or  aliens,  in  which  latter  case  it 
shall  have  original  but  not  exclusive  jurisdiction." 

Such  being  the  condition  of  the  law,  Alexander  Chisholm,  as  ex- 
ecutor of  Robert  Farquar,  commenced  an  action  of  assumpsit  in  this 
court  against  the  State  of  Georgia,  and  process  was  served  on  the 
Governor  and  Attorney-General.  Chisholm  v.  Georgia,  2  Dall,  419. 
On  the  llth  of  August,  1792,  after  the  process  was  thus  served, 
Mr.  Randolph,  the  Attorney-General  of  the  United  States,  as  counsel 
for  the  plaintiff,  moved  for  a  judgment  by  default  on  the  fourth  day 
of  the  next  term,  unless  the  State  should  then,  after  notice,  show 
cause  to  the  contrary.  At  the  next  term  Mr.  Ingersoll  and  Mr. 
Dallas  presented  a  written  remonstrance  and  protestation  on  behalf 
of  the  State  against  the  exercise  of  jurisdiction,  but  in  consequence 
of  positive  instructions  they  declined  to  argue  the  question.  Mr. 
Randolph,  thereupon,  proceeded  alone,  and  in  opening  his  argument 
said,  "I  did  not  want  the  remonstrance  of  Georgia,  to  satisfy  me  that 
the  motion  which  I  have  made  is  unpopular.  Before  the  remon- 
strance was  read,  I  had  learnt  from  the  facts  of  another  State,  whose 
will  must  always  be  dear  to  me,  that  she  too  condemned  it." 

On  the  19th  of  February,  1793,  the  judgment  of  the  court  was 
announced,  and  the  jurisdiction  sustained,  four  of  the  justices  being 
in  favor  of  granting  the  motion  and  one  against  it.  All  the  justices 
who  heard  the  case  filed  opinions,  some  of  which  were  very  elabo- 
rate, and  it  is  evident  the  subject  received  the  most  careful  con- 
sideration. *  *  *  * 

Prior  to  this  decision  the  public  discussion  had  been  confined  to 
the  power  of  the  court,  under  the  Constitution,  to  entertain  a  suit  in 
favor  of  a  citizen  against  a  State;  many  of  the  leading  members  of 
the  convention  arguing,  with  great  force,  against  it.  As  soon  as  the 
decision  was  announced,  steps  were  taken  to  obtain  an  amendment 
of  the  Constitution  withdrawing  jurisdiction.  About  the  time  the 
judgment  was  rendered,  another  suit  was  begun  against  Massachu- 
setts, and  process  served  on  John  Hancock,  the  Governor.  This  led 
to  the  convening  of  the  general  court  of  that  Commonwealth,  which 
passed  resolutions  instructing  the  Senators  and  requesting  the  mem- 
bers of  the  House  of  Representatives  from  the  State  "to  adopt  the 
most  speedy  and  effectual  measures  in  their  power  to  obtain  such 
amendments  in  the  Constitution  of  the  United  States  as  will  remove 
any  clause  or  articles  of  the  said  Constitution,  which  can  be  con- 
strued to  imply  or  justify  a  decision  that  a  State  is  compellable 
to  answer  in  any  suit  by  an  individual  or  individuals  in  any  courts 
of  the  United  States."  Other  States  also  took  active  measures  in 
the  same  direction,  and  soon  after  the  next  Congress  came  together 
the  Eleventh  Amendment  to  the  Constitution  was  proposed,  and 
afterwards  ratified  by  the  requisite  number  of  States,  so  as  to  go 
into  effect  on  the  8th  of  January,  1798.  That  amendment  is  as 
follows : — 

"The  judicial  power  of  the  United  States  shall  not  be  construed 
to  extend  to  any  suit  in  law  or  equity,  commenced  or  prosecuted 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  261 

against  one  of  the  United  States  by  citizens  of  another  State,  or  by 
citizens  and  subjects  of  any  foreign  State." 

Under  the  operation  of  this  amendment  the  actual  owners  of  the 
bonds  and  coupons  held  by  New  Hampshire  and  New  York  are 
precluded  from  prosecuting  these  suits  in  their  own  names.  The 
real  question,  therefore,  is  whether  they  can  sue  in  the  name  of  their 
respective  States,  after  getting  the  consent  of  the  State,  or,  to  put 
it  in  another  way,  whether  a  State  can  allow  the  use  of  its  name 
in  such  a  suit  for  the  benefit  of  one  of  its  citizens? 

The  language  of  the  amendment  is,  in  effect,  that  the  judicial 
power  of  the  United  States  shall  not  extend  to  any  suit  commenced 
or  prosecuted  by  citizens  of  one  State  against  another  State.  No 
one  can  look  at  the  pleadings  and  testimony  in  these  cases  without 
being  satisfied,  beyond  all  doubt,  that  they  were  in  legal  effect  com- 
menced, and  are  now  prosecuted,  solely  by  the  owners  of  the  bonds 
and  coupons.  In  New  Hampshire,  before  the  Attorney-General  is 
authorized  to  begin  a  suit,  the  owner  of  the  bonds  must  deposit 
with  him  a  sum  of  money  sufficient  to  pay  all  costs  and  expenses. 
No  compromise  can  be  effected  except  with  the  consent  of  the 
owner  of  the  claim.  No  money  of  the  State  can  be  expended  in 
the  proceeding,  but  all  expenses  must  be  borne  by  the  owner,  who 
may  associate  with  the  Attorney-General  such  counsel  as  he  chooses, 
the  State  being  in  no  way  responsible  for  fees.  All  moneys  col- 
lected are  to  be  kept  by  the  Attorney-General,  as  special  trustee, 
separate  and  apart  from  the  other  moneys  of  the  State,  and  paid 
over  by  him  to  the  owner  of  the  claim,  after  deducting  all  expenses 
although  signed  by  the  Attorney-General,  is  also  signed,  and  was 
evidently  drawn,  by  the  same  counsel  who  prosecuted  the  suits 
for  the  bondholders  in  Louisiana,  and  its  is  manifested  in  many  ways 
that  both  the  State  and  the  Attorney-General  are  only  nominal 
actors  in  the  proceeding.  The  bond  owner,  whoever  he  may  be, 
was  the  promoter  and  is  the  manager  of  the  suit.  He  pays  the 
expenses,  is  the  only  one  authorized  to  conclude  a  compromise, 
and  if  any  money  is  ever  collected,  it  must  be  paid  to  him  without 
even  passing  through  the  form  of  getting  into  the  treasury  of  the 
State. 

In 'New  York  no  special  provision  is  made  for  compromise  or  the 
employment  of  additional  counsel,  but  the  bondholder  is  required 
to  secure  and  pay  all  expenses  and  gets  all  the  money  that  is 
recovered.  This  State,  as  well  as  New  Hampshire,  is  nothing  more 
or  less  than  a  mere  collecting  agent  of  the  owners  of  the  bonds  and 
coupons,  and  while  the  suits  are  in  the  names  of  the  States,  they 
are  under  the  actual  control  of  individual  citizens,  and  are  prose- 
cuted and  carried  on  altogether  by  and  for  them.  *  *  *  * 

It  follows  that  when  the  amend  (eleventh  amendment)  took 
away  the  special  remedy  there  was  no  other  left.  Nothing  was 
added  to  the  Constitution  by  what  was  thus  done.  No  power  taken 
away  by  the  grant  of  the  special  remedy  was  restored  by  the  amend- 
ment. The  effect  of  the  amendment  was  simply  to  revoke  the  new 


262  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

right  that  had  been  given,  and  leave  the  limitations  to  stand  as  they 
were.  In  the  argument  of  the  opinions  filed  by  the  several  justices 
in  the  Chisholm  case,  there  is  not  even  an  intimation  that  if  the 
citizen  could  not  sue,  his  State  could  sue  for  him.  The  evident 
purpose  of  the  amendment,  so  promptly  proposed  and  finally  adopted, 
was  to  prohibit  all  suits  against  a  State  by  or  for  citizens  of  other 
States,  or  aliens,  without  the  consent  of  the  State  to  be  sued ;  and, 
in  our  opinion,  one  State  cannot  create  a  controversy  with  another 
State,  within  the  meaning  of  that  term  as  used  in  the  judicial  clauses 
of  the  Constitution,  by  assuming  the  prosecution  of  debts  owing 
by  the  other  State  to  its  citizens.  Such  being  the  case,  we  are 
satisfied  that  we  are  prohibited,  both  by  the  letter  and  the  spirit  of 
the  Constitution,  from  entertaining  these  suits,  and 

'       The  bill  in  each  of  the  cases  is  consequently  dismissed. 


Sub-Section  B. 
SUITS  BETWEEN  THE  UNITED  STATES  AND  A  STATE. 

UNITED   STATES  v.   TEXAS. 
143  U.  S.,  621.     1892. 

This  was  an  original  suit  brought  in  the  Supreme  Court  of  the 
United  States  by  the  Attorney-General  on  behalf  of  the  United 
States  against  the  State  of  Texas.  The  Act  of  May  2,  1890,  which 
provided  a  temporary  government  for  the  Territory  of  Oklahoma 
directed  such  a  suit  to  be  brought  to  establish  the  title  of  the  United 
States  to  the  country  lying  between  the  North  and  South  Forks  of 
the  Red  River,  where  the  Indian  Territory  and  the  State  of  Texas 
adjoin.  The  government  alleged  that  the  State  of  Texas  had  with- 
out right  taken  possession  of  the  disputed  territory  in  violation  of 
the  rights  of  the  United  States  over  that  land,  as  constituting  a  part 
of  the  territory  of  Oklahoma.  The  State  of  Texas  made  an  appear- 
ance to  the  action,  but  questioned  the  right  of  the  Federal  govern- 
ment to  bring  a  suit  against  a  State  of  the  Union  in  one  of  its  own 
courts. 

MR.  JUSTICE  HARLAN  delivered  the  opinion  of  the  court. 

(The  court  first  passed  upon  the  question  of  whether  a  dispute 
as  to  boundary  line  between  States  or  Territories  was  a  political  or 
judicial  question  and  concluded :  "It  cannot  with  propriety  be  said 
that  a  question  of  boundary  between  a  Territory  of  the  United 
States  and  one  of  the  States  of  the  Union  is  of  a  political  nature, 
and  not  susceptible  of  judicial  determination  by  a  court  having 
jurisdiction  of  such  controversy.") 

The  important  question  therefore,  is,  whether  this  court  can, 
under  the  Constitution,  take  cognizance  of  an  original  suit  brought 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  263 

by  the  United  States  against  a  State  to  determine  the  boundary 
between  one  of  the  Territories  and  such  State.  Texas  insists  that 
no  such  jurisdiction  has  been  conferred  upon  this  court,  and  that 
the  only  mode  in  which  the  present  dispute  can  be  peaceably  settled 
is  by  agreement,  in  some  form,  between  the  United  States  and 
that  State.  *  *  *  * 

The  cases  in  this  court  show  that  the  framers  of  the  Constitution 
did  provide,  by  that  instrument,  for  the  judicial  determination  of 
all  cases  in  law  and  equity  between  two  or  more  States,  including 
those  involving  questions  of  boundary.  Did  they  omit  to  provide 
for  the  judicial  determination  of  controversies  arising  between  the 
United  States  and  one  or  more  of  the  States  of  the  Union?  This 
question  is  in  effect  answered  by  United  States  v.  North  Carolina, 
136  U.  S.  211.  That  was  an  action  of  debt  brought  in  this  court  by 
the  United  States  against  the  State  of  North  Carolina,  upon  certain 
bonds  issued  by  that  State.  The  State  appeared,  the  case  was  de- 
termined here  upon  its  merits  and  judgment  was  rendered  for  the 
State.  It  is  true  that  no  question  was  made  as  to  the  jurisdiction 
of  this  court,  and  nothing  was  therefore  said  in  the  opinion  upon 
that  subject.  But  it  did  not  escape  the  attention  of  the  court,  and  the 
judgment  would  not  have  been  rendered  except  upon  the  theory  that 
this  court  has  original  jurisdiction  of  a  suit  by  the  United  States 
against  a  State.  As,  however,  the  question  of  jurisdiction  is  vital  in 
this  case,  and  is  distinctly  raised,  it  is  proper  to  consider  it  upon 
its  merits. 

The  Constitution  extends  the  judicial  power  of  the  United  States 
"to  all  cases,  in  law  and  equity,  arising  under  this  Constitution,  the 
laws  of  the  United  States  and  treaties  made,  or  which  shall  be  madt, 
under  their  authority ;  to  all  cases  affecting  ambassadors,  other  pub- 
lic ministers  and  consuls;  to  all  cases  of  admiralty  and  maritime 
jurisdiction ;  to  controversies  to  which  the  United  States  shall  be  a 
party;  to  controversies  between  two  or  more  States;  between  a 
State  and  citizens  of  another  State ;  between  citizens  of  different 
States ;  between  citizens  of  the  same  State  claiming  lands  under 
grants  of  different  States,  and  between  a  State  or  the  citizens  thereof 
and  foreign  States,  citizens  or  subjects. 

"In  all  cases,  affecting  ambassadors  or  other  public  ministers  and 
consuls  and  those  in  which  a  State  shall  be  a  party,  the  Supreme 
Court  shall  have  original  jurisdiction.  In  all  the  other  cases  before 
mentioned,  the  Supreme  Court  shall  have  appellate  jurisdiction,  both 
as  to  law  and  fact,  with  such  exceptions,  and  under  such  regulations 
as  the  Congress  shall  make."  Art.  3,  §  2.  "The  judicial  power 
of  the  United  States  shall  not  be  construed  to  extend  to  any  suit 
in  law  or  equity,  commenced  or  prosecuted  against  one  of  the  United 
States  by  citizens  of  another  State,  or  by  citizens  or  subjects  of  any 
foreign  State."  llth  Amendment. 

It  is  apparent  upon  the  face  of  these  clauses  that  in  one  class  of 
cases  the  jurisdiction  of  the  courts  of  the  Union  depends  "on  the 
character  of  the  cause,  whoever  may  be  the  parties,"  and,  in  the 


264  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

other,  on  the  character  of  the  parties,  whatever  may  be  the  subject 
of  controversy.  Cohens  v.  Virginia,  6  Wheat.  264,  378,  393.  The 
present  suit  falls  in  each  class,  for  it  is,  plainly,  one  arising  under 
the  Constitution,  laws,  and  treaties  of  the  United  States,  and,  also, 
one  in  which  the  United  States  is  a  party.  It  is,  therefore,  one  to 
which,  by  the  express  words  of  the  Constitution,  the  judicial  power 
of  the  United  States  extends.  *  *  *  * 

We  cannot  assume  that  the  framers  of  the  Constitution,  while 
extending  the  judicial  power  of  the  United  States  to  controversies 
between  two  or  more  States  of  the  Union,  and  between  a  State  of  the 
Union  and  foreign  States,  intended  to  exempt  a  State  altogether 
from  suit  by  the  general  government.  They  could  not  have  over- 
looked the  possibility  that  controversies,  capable  of  judicial  solu- 
tion, might  arise  between  the  United  States  and  some  of  the  States, 
and  that  the  permanence  of  the  Union  might  be  endangered  if  to 
some  tribunal  was  not  instrusted  the  power  to  determine  them  ac- 
cording to  the  recognized  principles  of  law.  And  to  what  tribunal 
could  a  trust  so  momentous  be  more  appropriately  committed  than 
to  that  which  the  people  of  the  United  States,  in  order  to  form  a 
more  perfect  Union,  establish  justice  and  insure  domestic  tran- 
quillity, have  constituted  with  authority  to  speak  for  all  the  people 
and  all  the  States,  upon  questions  before  it  to  which  the  judicial 
power  of  the  nation  extends?  It  would  be  difficult  to  suggest  any 
reason  why  this  court  should  have  jurisdiction  to  determine  ques- 
tions of  boundary  between  two  or  more  States,  but  not  jurisdiction 
of  controversies  of  like  character  between  the  United  States  and  a 
State.  *  *  *  * 

The  question  as  to  the  suability  of  one  government  by  another 
government  rests  wholly  upon  different  grounds.  Texas  is  not 
called  to  the  bar  of  this  court  at  the  suit  of  an  individual,  but  at 
the  suit  of  the  government  established  for  the  common  and  equal 
benefit  of  the  people  of  all  the  States.  The  submission  to  judicial 
solution  of  controversies  arising  between  these  two  governments, 
"each  sovereign,  with  respect  to  the  objects  committed  to  it,  and 
neither  sovereign  with  respect  to  the  objects  committed  to  the  other," 
McCulloch  v.  State  of  Maryland,  4  Wheat.  316,  400,  410,  but  both 
subject  to  the  supreme  law  of  the  land,  does  no  violence  to  the 
inherent  nature  of  sovereignty.  The  States  of  the  Union  have 
agreed,  in  the  Constitution,  that  the  judicial  power  of  the  United 
States  shall  extend  to  all  cases  arising  under  the  Constitution,  laws, 
and  treaties  of  the  United  States,  without  regard  to  the  character  of 
the  parties  (excluding,  of  course,  suits  against  a  State  by  its  own 
citizens  or  by  citizens  of  other  States,  or  by  citizens  or  subjects  of 
foreign  States),  and  equally  to  controversies  to  which  the  United 
States  shall  be  a  party,  without  regard  to  the  subject  of  such  con- 
troversies, and  that  this  court  may  exercise  original  jurisdiction  in 
all  such  cases,  "in  which  a  State  shall  be  a  party,"  without  excluding 
those  in  which  the  United  States  may  be  the  opposite  party.  The 
exercise,  therefore,  by  this  court,  of  such  original  jurisdiction  in  a 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  265 

suit  brought  by  one  State  against  another  to  determine  the  boundary 
line  between  them,  or  in  a  suit  brought  by  the  United  States  against 
a  State  to  determine  the  boundary  between  a  Territory  of  the  United 
States  and  that  State,  so  far  from  infringing,  in  either  case,  upon 
the  sovereignty,  is  with  the  consent  of  the  State  sued.  Such  con- 
sent was  given  by  Texas  when  admitted  into  the  Union  upon  an 
equal  footing  in  all  respects  with  the  other  States.  *  *  *  * 

(The  court  overruled  the  objection  that  a  State  could  not  be  sued 
by  the  Federal  Government.) 

MR.  CHIEF  JUSTICE  FULLER,  with  whom  concurred  MR.  JUSTICE 
LAMAR,  dissenting. 

Mr.  Justice  Lamar  and  myself  are  unable  to  concur  in  the  decision 
just  announced. 

This  court  has  original  jurisdiction  of  two  classes  of  cases  only, 
those  affecting  ambassadors,  other  public  ministers  and  consuls,  and 
those  in  which  a  State  shall  be  a  party. 

The  judicial  power  extends  to  "controversies  between  two  or  more 
States;"  "between  a  State  and  citizens  of  another  State,"  and  "be- 
tween a  State  or  the  citizens  thereof,  and  foreign  States,  citizens  or 
subjects."  Our  original  jurisdiction,  which  depends  solely  upon  the 
character  of  the  parties,  is  confined  to  the  cases  enumerated,  in 
which  a  State  may  be  a  party,  and  this  is  not  one  of  them. 

The  judicial  power  also  extends  to  controversies  to  which  the 
United  States  shall  be  a  party,  but  such  controversies  are  not  in- 
cluded in  the  grant  of  original  jurisdiction.  To  the  controversy  here 
the  United  States  is  a  party. 

We  are  of  opinion,  therefore,  that  this  case  is  not  within  the 
original  jurisdiction  of  the  court. 


Section  2. 
SUITS  AGAINST  A,  STATE  BY  ONE  OF  ITS  OWN  CITIZENS. 

HANS  v.  LOUISIANA. 
134  U.  S.,  1.     1890. 

This  suit  was  brought  in  the  Circuit  Court  of  the  United  States 
in  Louisiana  by  Bernard  Hans,  a  citizen  of  Louisiana,  against  the 
State  of  Louisiana  to  recover  the  amount  of  certain  coupons,  an- 
nexed to  bonds  issued  by  the  State.  The  plaintiff  Hans  contended 
that  he,  being  a  citizen  of  Louisiana,  could  maintain  suit  against  the 
State,  as  the  llth  Amendment  of  the  Constitution  prohibited  only 
suits  against  a  State  which  were  brought  by  citizens  of  another 
State,  or  by  citizens  or  subjects  of  a  foreign  State.  Hans  asserted 


266  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

that  it  was  a  violation  of  the  Constitution  for  a  State  "to  impair  the 
obligation  of  its  own  contract  by  refusing  to  pay  its  bonds."  The 
State  appeared  and  excepted  to  the  suit  on  the  ground  that  a  State 
could  not  be  sued  without  its  permission,  and  asked  that  the  case 
be  dismissed. 

MR.  JUSTICE  BRADLEY  delivered  the  opinion  of  the  court. 

*  *  *  *  The  question  is  presented,  whether  a  State  can  be 
sued  in  a  Circuit  Court  of  the  United  States  by  one  of  its  own 
citizens  upon  a  suggestion  that  the  case  is  one  that  arises  under  the 
Constitution  or  laws  of  the  United  States. 

The  ground  taken  is,  that  under  the  Constitution,  as  well  as 
under  the  act  of  Congress  passed  to  carry  it  into  effect,  a  case  is 
within  the  jurisdiction  of  the  Federal  courts,  without  regard  to  the 
character  of  the  parties,  if  it  arises  under  the  Constitution  or  laws 
of  the  United  States,  or  which  is  the  same  thing,  if  it  necessarily 
involves  a  question  under  said  Constitution  or  laws.  The  language 
relied  on  is  that  clause  of  the  3d  article  of  the  Constitution  which 
declares  that  "the  judicial  power  of  the  United  States  shall  extend 
to  all  cases  in  law  and  equity  arising  under  this  Constitution,  the 
laws  of  the  United  States,  and  treaties  made,  or  which  shall  be 
made,  under  their  authority;"  and  the  corresponding  clause  of  the 
act  conferring  jurisdiction  upon  the  Circuit  Court,  which,  as  found 
in  the  act  of  March  3,  1875,  is  as  follows,  to  wit:  "That  the  Circuit 
Courts  of  the  United  States  shall  have  original  cognizance,  concur- 
rent with  the  courts  of  the  several  States,  of  all  suits  of  a  civil 
nature  at  common  law  or  in  equity,  ....  arising  under  the  Con- 
stitution or  laws  of  the  United  States,  or  treaties  made,  or  which 
shall  be  made,  under  their  authority."  It  is  said  that  these  jurisdic- 
tional  clauses  make  no  exception  arising  from  the  character  of  the 
parties,  and,  therefore,  that  a  State  can  claim  no  exemption  from 
suit,  if  the  case  is  really  one  arising  under  the  Constitution,  laws,  or 
treaties  of  the  United  States.  It  is  conceded  that  where  the  juris- 
diction depends  alone  upon  the  character  of  the  parties,  a  controversy 
between  a  State  and  its  own  citizens  is  not  embraced  within  it;  but 
it  is  contended  that  though  jurisdiction  does  not  exist  on  the  ground, 
it  nevertheless  does  exist  if  the  case  itself  is  one  which  necessarily 
involves  a  Federal  question;  and  with  regard  to  ordinary  parties 
this  is  undoubtedly  true.  The  question  now  to  be  decided  is, 
whether  it  is  true  where  one  of  the  parties  is  a  State,  and  is  sued 
as  a  defendant  by  one  of  its  own  citizens. 

That  a  State  cannot  be  sued  by  a  citizen  of  another  State,  or  of  a 
foreign  State,  on  the  mere  ground  that  the  case  is  one  arising  under 
the  Constitution  or  laws  of  the  United  States,  is  clearly  established 
by  the  decisions  of  this  court  in  several  recent  cases.  Louisiana  v. 
Jumel,  107  U.  S.  711.  This  was  a  case  arising  under  the  Consti- 
tution of  the  United  States,  upon  laws  complained  of  as  impairing 
the  obligation  of  contracts,  one  of  which  was  the  constitutional 
amendment  of  Louisiana  complained  of  in  the  present  case.  Relief 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  267 

was  sought  against  State  officers  who  professed  to  act  in  obedience 
to  those  laws.  This  court  held  that  the  suits  were  virtually  against 
the  States  themselves  and  were  consequently  violative  of  the  Elev- 
enth Amendment  of  the  Constitution  and  could  not  be  maintained. 
It  was  not  denied  that  they  presented  cases  arising  under  the  Con- 
stitution; but,  notwithstanding  that,  they  were  held  to  be  prohibited 
by  the  amendment  referred  to. 

In  the  present  case  the  plaintiff  in  error  contends  that  he,  being 
a  citizen  of  Louisiana,  is  not  embarrassed  by  the  obstacles  of  the 
Eleventh  Amendment,  inasmuch  as  that  amendment  only  prohibits 
suits  against  a  State  which  are  brought  by  the  citizens  of  another 
State,  or  by  citizens  or  subjects  of  a  foreign  State.  It  is  true,  the 
amendment  does  so  read;  and  if  there  were  no  other  reason  or 
ground  for  abating  his  suit,  it  might  be  maintainable;  and  then  we 
should  have  this  anomalous  result,  that  in  cases  arising  under  the 
Constitution  or  laws  of  the  United  States,  a  State  may  be  sued  in 
the  Federal  courts  by  its  own  citizens,  though  it  cannot  be  sued  for 
a  like  cause  of  action  by  the  citizens  of  other  States  or  of  a  foreign 
State;  and  may  be  thus  sued  in  the  Federal  courts,  although  not 
allowing  itself  to  be  sued  in  its  own  courts.  If  this  is  the  necessary 
consequence  of  the  language  of  the  Constitution  and  the  law,  the 
result  is  no  less  startling  and  unexpected  than  was  the  original  de- 
cision of  this  court,  that  under  the  language  of  the  Constitution  and 
of  the  Judiciary  Act  of  1789,  a  State  was  liable  to  be  sued  by  a  citi- 
zen of  another  State,  or  of  a  foreign  country.  That  decision  was 
made  in  the  case  of  Chisholm  v.  Georgia,  2  Ball,  419,  and  created 
such  a  shock  of  surprise  throughout  the  country  that,  at  the  first 
meeting  of  Congress  thereafter,  the  Eleventh  Amendment  to  the 
Constitution  was  almost  unanimously  proposed,  and  was  in  due 
course  adopted  by  the  legislatures  of  the  States.  This  amendment, 
expressing  the  will  of  the  ultimate  sovereignty  of  the  whole  country, 
superior  to  all  legislatures  and  all  courts,  actually  reversed  the 
decision  of  the  Supreme  Court.  It  did  not  in  terms  prohibit  suits 
by  individuals  against  the  States,  but  declared  that  the  Constitution 
should  not  be  construed  to  impart  any  power  to  authorize  the  bring- 
ing of  such  suits.  *  *  *  * 

The  suability  of  a  State  without  its  consent  was  a  thing  unknown 
to  the  law.  This  has  been  so  often  laid  down  and  acknowledged  by 
courts  and  jurists  that  it  is  hardly  necessary  to  be  formally  asserted. 
It  was  fully  shown  by  an  exhaustive  examination  of  the  old  law 
by  Mr.  Justice  Iredell  in  his  opinion  in  Chisholm  v.  Georgia ;  and  it 
has  been  conceded  in  every  case  since,  where  the  question  has,  in 
any  way,  been  presented,  even  in  the  cases  which  have  gone  farthest 
in  sustaining  suits  against  the  officers  or  agents  of  States.  In  all 
these  cases  the  effort  was  to  show,  and  the  court  held,  that  the  suits 
were  not  against  the  State  or  the  United  States,  but  against  the 
individuals ;  conceding  that  if  they  had  been  against  either  the  State 
or  the  United  States,  they  could  not  be  maintained.  *  *  *  * 

Undoubtedly  a  State  may  be  sued  by  its  own  consent,  as  was  the 


268  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

case  in  Curran  v.  Arkansas,  15  How.  304,  309,  and  in  Clark  v. 
Barnard,  108  U.  S.  436,  447.  The  suit  in  the  former  case  was 
prosecuted  by  virtue  of  a  State  law  which  the  legislature  passed  in 
conformity  to  the  constitution  of  the  State.  But  this  court  decided, 
in  Beers  v.  Arkansas,  20  How.  527,  that  the  State  could  repeal 
that  law  at  any  time;  that  it  was  not  a  contract  within  the  terms 
of  the  Constitution  prohibiting  the  passage  of  State  laws  impair- 
ing the  obligation  of  a  contract.  *  *  *  * 

It  is  not  necessary  that  we  should  enter  upon  an  examination  of 
the  reason  or  expediency  of  the  rule  which  exempts  a  sovereign  State 
from  prosecution  in  a  court  of  justice  at  the  suit  of  individuals. 
This  is  fully  discussed  by  writers  on  public  law.  It  is  enough  for 
us  to  declare  its  existence.  The  legislative  department  of  a  State 
represents  its  policy  and  its  will;  and  is  called  upon  by  the  highest 
demands  of  natural  and  political  law  to  preserve  justice  and  judg- 
ment, and  to  hold  inviolate  the  public  obligations.  Any  departure 
from  this  rule,  except  for  reasons  most  cogent  (of  which  the  legisla- 
ture, and  not  the  courts,  is  the  judge),  never  fails  in  the  end  to 
incur  the  odium  of  the  world,  and  to  bring  lasting  injury  upon  the 
State  itself.  But  to  deprive  the  legislature  of  the  power  of  judging 
what  the  honor  and  safety  of  the  State  may  require,  even  at  the 
expense  of  a  temporary  failure  to  discharge  the  public  debts,  would 
be  attended  with  greater  evils  than  such  failure  can  cause. 

Affirmed. 


Note. — See  also  New  Hampshire  v.  Louisiana,  page  259. 

Section  3. 
THE  LAW  ADMINISTERED  BY  THE  FEDERAL  COURTS. 

SWIFT  v.  TYSON. 
16  PETERS,  1.     1842. 

Suit  was  instituted  in  the  Circuit  Court  of  the  United  States  by 
Swift,  as  indorsee  of  a  bill  of  exchange,  dated  at  Portland,  Maine, 
on  May  1st,  1836,  and  accepted  by  Tyson  in  New  York  City.  It 
was  claimed  by  Tyson  that  the  consideration  for  the  bill  was  a  pre- 
existing debt,  that  such  a  consideration  was  not  a  valid  one  under 
the  law  of  New  York,  that  the  acceptance  having  been  made  in  New 
York  the  contract  was  to  be  considered  as  a  New  York  contract, 
and  therefore  governed  by  the  laws  of  that  State,  which  laws  were 
obligatory  upon  the  Federal  court. 

MR.  JUSTICE  STORY  delivered  the  opinion  of  the  court. 

*  *  *  *  In  the  present  case,  the  plaintiff  is  a  bona  fide  holder 
without  notice  for  what  the  law  deems  a  good  and  valid  considera- 
tion, that  is,  for  a  pre-existing  debt;  and  the  only  real  question  in 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  269 

the  cause  is,  whether,  under  the  circumstances  of  the  present  case, 
such  a  pre-existing  debt  constitutes  a  valuable  consideration  in  the 
sense  of  the  general  rule  applicable  to  negotiable  instruments.  We 
say,  under  the  circumstances  of  the  present  case,  for  the  acceptance 
having  been  made  in  New  York,  the  argument  on  behalf  of  the 
defendant  is,  that  the  contract  is  to  be  treated  as  a  New  York  con- 
tract, and  therefore  to  be  governed  by  the  laws  of  New  York,  as 
expounded  by  its  courts,  as  well  upon  general  principles,  as  by  the 
express  provisions  of  the  34th  section  of  the  Judiciary  Act  of  1789, 
c.  20.  And  then  it  is  further  contended  that,  by  the  law  of  New 
York,  as  thus  expounded  by  its  courts,  a  pre-existing  debt  does  not 
constitute,  in  the  sense  of  the  general  rule,  a  valuable  consideration 
applicable  to  negotiable  instruments.  *  *  *  * 

But,  admitting  the  doctrine  to  be  fully  settled  in  New  York,  it 
remains  to  be  considered  whether  it  is  obligatory  upon  this  court,  if 
it  differs  from  the  principles  established  in  the  general  commercial 
law.  It  is  observable  that  the  courts  of  New  York  do  not  found 
their  decisions  upon  this  point  upon  any  local  statute  or  positive, 
fixed  or  ancient  local  usage;  but  they  deduce  the  doctrine  from  the 
general  principles  of  commercial  law.  It  is,  however,  contended 
that  the  34th  section  of  the  Judiciary  Act  of  1789,  c.  20,  furnishes  a 
rule  obligatory  upon  this  court  to  follow  the  decisions  of  the  State 
tribunals  in  all  cases  to  which  they  apply.  That  section  provides 
"that  the  laws  of  the  several  States,  except  where  the  Constitution, 
treaties,  or  statutes  of  the  United  States  shall  otherwise  require  or 
provide,  shall  be  regarded  as  rules  of  decision  in  trials  at  common 
law  in  the  courts  of  the  United  States,  in  cases  where  they  apply." 
In  order  to  maintain  the  argument,  it  is  essential,  therefore,  to  hold 
that  the  word  "laws,"  in  this  section,  includes  within  the  scope  of 
its  meaning  the  decisions  of  the  local  tribunals.  In  the  ordinary 
use  of  language,  it  will  hardly  be  contended  that  the  decisions  of 
courts  constitute  laws.  They  are,  at  most,  only  evidence  of  what 
the  laws  are,  and  are  not  of  themselves  laws.  They  are  often  re- 
examined,  reversed,  and  qualified  by  the  courts  themselves,  when- 
ever they  are  found  to  be  either  defective,  or  ill-founded  or  other- 
wise incorrect.  The  laws  of  a  State  are  more  usually  understood  to 
mean  the  rules  and  enactments  promulgated  by  the  legislative  author- 
ity thereof,  or  long-established  local  customs  having  the  force  of 
laws.  In  all  the  various  cases,  which  have  hitherto  come  before  us 
for  decision,  this  court  has  uniformly  supposed  that  the  true  inter- 
pretation of  the  34th  section  limited  its  application  to  State  laws 
strictly  local,  that  is  to  say,  to  the  positive  statutes  of  the  State, 
and  the  construction  thereof  adopted  by  the  local  tribunals,  and  to 
rights  and  titles  to  things  having  a  permanent  locality,  such  as  the 
rights  and  titles  to  real  estate,  and  other  matters  immovable  and 
intraterritorial  in  their  nature  and  character.  It  never  has  been 
supposed  by  us  that  the  section  did  not  apply,  or  was  designed  to 
apply,  to  questions  of  a  more  general  nature,  not  at  all  dependent 
upon  local  statues  or  local  usages  of  a  fixed  and  permanent  opera- 


F 


to 


270  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

tion,  as,  for  example,  to  the  construction  of  ordinary  contracts  or 
other  written  instruments,  and  especially  to  questions  of  general 
commercial  law,  where  the  State  tribunals  are  called  upon  to  per- 
form the  like  functions  as  ourselves,  that  is,  to  ascertain,  upon  gen- 
eral reasoning  and  legal  analogies,  what  is  the  true  exposition  of  the 
contract  or  instrument,  or  what  is  the  just  rule  furnished  by  the 
principles  of  commercial  law  to  govern  the  case.  And  we  have  not 
now  the  slightest  difficulty  in  holding  that  this  section,  upon  its  true 
intendment  and  construction,  is  strictly  limited  to  local  statutes  and 
local  usages  of  the  character  before  stated,  and  does  not  extend  to 
contracts  and  other  instruments  of  a  commercial  nature,  the  true 
interpretation  and  effect  whereof  are  to  be  sought,  not  in  the  deci- 
sions of  the  local  tribunals,  but  in  the  general  principles  and  doctrines 
of  commercial  jurisprudence.  Undoubtedly,  the  decisions  of  the 
local  tribunals  upon  such  subjects  are  entitled  to,  and  will  receive, 
the  most  deliberate  attention  and  respect  of  this  court ;  but  they  can- 
not furnish  positive  rules,  or  conclusive  authority,  by  which  our  own 
judgments  are  to  be  bound  up  and  governed.  The  law  respecting 
negotiable  instruments  may  ^be  truly  declared,  in  the  language  of 
Cicero,  adopted  by  Lord  Mansfield  in  Luke  v.  Lyde,  2  Burr.  R.  882, 
887,  to  be  in  a  great  measure,  not  the  law  of  a  single  country  only, 
but  of  the  commercial  world.  *  *  *  * 

This  question  has  been  several  times  before  this  court,  and  it  has 
been  uniformly  held,  that  it  makes  no  difference  whatsoever  as  to 
the  rights  of  the  holder,  whether  the  debt,  for  which  the  negotiable 
instrument  is  transferred  to  him,  is  a  pre-existing  debt  or  is  con- 
tracted at  the  time  of  the  transfer.  In  each  case,  he  equally  gives 
credit  to  the  instrument.  The  case  of  Coolidge  v.  Payson,  2  Wheat. 
66,  70,  73,  and  Townsley  v.  Sumrall,  2  Pet.  170,  182,  are  directly 
in  point. 

We  are  all,  therefore,  of  opinion  that  the  question  on  this  point, 
propounded  by  the  Circuit  Court  for  our  consideration,  ought  to  be 
answered  in  the  negative ;  and  we  shall  accordingly  direct  it  so  to  be 
certified  to  the  Circuit  Court. 


Section  4. 

POWER  OF  THE  COURTS  TO  DECLARE  AN  ACT  OF  THE 
LEGISLATURE  NULL  AND  VOID. 

1.  As  to  Acts  of  Congress. 
Marbury  v.  Madison,  page  23. 
Hepburn  v.  Griswold,  page  221. 

Pollock  v.  Farmers'  Loan  and  Trust  Company,  page  57. 

2.  As  to  Acts  of  State  Legislature. 
M'Culloch  v.  Maryland,  page  50. 
Gibbons  v.  Ogden,  page  72. 

Brown  v.  Maryland,  page  166. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  271 


CHAPTER  IV. 

Constitutional  Guarantees 

Section  1. 
TRIAL  BY  JURY. 

EX  PARTE  MILLIGAN. 
4  WALLACE,  2.     1866. 

On  the  10th  day  of  May,  1869,  Lambdin  P.  Milligan  presented  a 
petition  to  the  Circuit  Court  of  the  United  States  for  the  District 
of  Indiana  in  which  he  prayed  that  he  be  discharged  from  an  alleged 
unlawful  imprisonment.  The  facts  of  the  case  were  as  follows :  Mil- 
ligan was  a  citizen  of  the  United  States  and  a  resident  for  twenty 
years  of  the  State  of  Indiana.  He  was  not,  nor  ever  had  been,  in  the 
military  or  naval  service  of  the  United  States.  While  at  his  home, 
on  the  5th  day  of  October,  1864,  he  was  arrested  by  order  of  Gen- 
eral Hovey,  commanding  the  military  district  of  Indiana,  and  con- 
fined in  a  military  prison  near  Indianapolis.  On  the  21st  day  of  Oc- 
tober, 1864,  he  was  brought  before  a  military  commission,  convened 
at  Indianapolis,  by  order  of  General  Hovey,  was  tried  on  the  charge 
of  conspiracy  against  the  Government  of  the  United  States,  afford- 
ing aid  and  comfort  to  rebels  against  the  authority  of  the  United 
States,  and  other  charges.  He  was  found  guilty  and  sentenced  to 
be  hanged.  The  sentence  was  approved  by  the  President  of  the 
United  States.  On  the  2d  day  of  January,  1865,  after  the  pro- 
ceedings of  the  military  commission  were  at  an  end,  the  Circuit 
Court  of  the  United  States  for  Indiana  met  at  Indianapolis  and 
empanelled  a  jury,  who  were  charged  to  inquire  whether  the  laws 
of  the  United  States  had  been  violated.  The  court  adjourned  Jan- 
uary 27,  1865,  and  discharged  the  jury  from  further  service.  No 
bill  of  indictment  or  presentment  was  found  against  Milligan,  for 
any  offense  whatever  by  the  grand  jury  for  Indiana.  Milligan 
insisted  that  the  military  commission  had  no  jurisdiction  to  try  him, 
that  he  had  not  been  a  citizen  of  any  of  the  States  arrayed  against 
the  government,  and  that  the  right  of  trial  by  jury  was  guaranteed 
to  him  by  the  Constitution  of  the  United  States. 

MR.  JUSTICE  DAVIS  delivered  the  opinion  of  the  court. 


272  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

*  *  *  The  discipline  necessary  to  the  efficiency  of  the  army  and 
navy  requires  other  and  swifter  modes  of  trial  than  are  furnished  by 
the  common  law  courts ;  and,  in  pursuance  of  the  power  conferred 
by  the  Constitution,  Congress  has  declared  the  kinds  of  trial,  and 
the  manner  in  which  they  shall  be  conducted,  for  offenses  com- 
mitted while  the  party  is  in  the  military  or  naval  service.  Every  one 
connected  with  these  branches  of  the  public  service  is  amenable  to 
the  jurisdiction  which  Congress  has  created  for  their  government, 
and  while  thus  serving,  surrenders  his  right  to  be  tried  by  the  civil 
courts.  All  other  persons,  citizens  of  States  where  the  courts  are 
open,  if  charged  with  crime,  are  guaranteed  the  inestimable  privi- 
lege of  a  trial  by  jury.  This  privilege  is  a  vital  principle,  underlying 
the  whole  administration  of  criminal  justice;  it  is  not  held  by  suf- 
ferance, and  cannot  be  frittered  away  on  any  plea  of  State  or  po- 
litical necessity.  When  peace  prevails,  and  the  authority  of  the  gov- 
ernment is  undisputed,  there  is  no  difficulty  of  preserving  the  safe- 
guards of  liberty;  for  the  ordinary  modes  of  trial  are  never  ne- 
glected, and  no  one  wishes  it  otherwise;  but  if  society  is  disturbed 
by  civil  commotion — if  the  passions  of  men  are  aroused  and  the  re- 
straints of  law  weakened,  if  not  disregarded — these  safeguards  need, 
and  should  receive  the  watchful  care  of  those  intrusted  with  the 
guardianship  of  the  Constitution  and  laws.  It  is  claimed  that  mar- 
tial law  covers  with  its  broad  mantle  the  proceedings  of  this  military 
commission.  The  proposition  is  this;  that  in  a  time  of  war  the 
commander  of  an  armed  force  *  *  *  has  the  power,  within  the  lines 
of  his  military  district  to  suspend  all  civil  rights  and  their  remedies, 
and  subject  citizens  as  well  as  soldiers,  to  the  rule  of  his  will,  and 
in  the  exercise  of  his  lawful  authority  cannot  be  restrained,  except 
by  his  superior  officer  or  the  President  of  the  United  States.  If 
this  position  is  sound  to  the  extent  claimed,  then  when  war  exists, 
foreign  or  domestic,  and  the  country  is  subdivided  into  military  de- 
partments for  mere  convenience,  the  commander  of  each  one  of 
them  can,  if  he  chooses,  within  his  limits,  on  the  plea  of  necessity, 
with  the  approval  of  the  Executive,  substitute  military  force  for  and 
to  the  exclusion  of  the  laws,  and  punish  all  persons,  as  he  thinks 
right  and  proper,  without  fixed  or  certain  rules.  The  statement  of 
this  proposition  shows  its  importance,  for,  if  true,  republican  gov- 
ernment is  a  failure,  and  there  is  an  end  of  liberty  regulated  by  law 
*  *  *  Civil  liberty  and  this  kind  of  martial  law  cannot  endure  to- 
gether; the  antagonism  is  irreconcilable;  and,  in  the  conflict,  one 
or  the  other  must  perish.  *  *  *  The  necessities  of  the  service,  dur- 
ing the  late  Rebellion,  required  that  the  loyal  States  should  be  placed 
within  the  limits  of  certain  military  districts  and  commanders  ap- 
pointed in  them ;  and,  it  is  urged,  that  this,  in  a  military  sense, 
constituted  them  the  theatre  of  military  operations ;  and  as  in  this 
case,  Indiana  had  been  and  was  again  threatened  with  invasion  by 
the  enemy,  the  occasion  was  furnished  to  establish  martial  law. 
The  conclusion  does  not  follow  from  the  premises.  If  armies  were 
collected  in  Indiana,  they  were  to  be  employed  in  another  locality, 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  273 

where  the  laws  were  obstructed  and  the  national  authority  disputed. 
On  her  soil  there  was  no  hostile  foot;  if  once  invaded,  that  inva- 
sion was  at  an  end,  and  with  it  all  pretext  for  martial  law.  Martial 
law  cannot  arise  from  a  threatened  invasion.  The  necessity  must 
be  actual  and  present;  the  invasion  real,  such  as  effectually  closes 
the  courts  and  deposes  the  civil  administration.  It  is  difficult  to  see 
how  the  safety  of  the  country  required  martial  law  in  Indiana.  If 
any  of  her  citizens  were  plotting  treason,  the  power  of  arrest  could 
secure  them,  until  the  government  was  prepared  for  their  trial,  when 
the  courts  were  open  and  ready  to  try  them.  It  was  as  easy  to  pro- 
tect witnesses  before  a  civil  as  well  as  a  military  tribunal;  and  as 
there  could  be  no  wish  to  convict,  except  on  sufficient  legal  evidence, 
surely  an  ordained  and  established  court  was  better  able  to  judge  of 
this  than  a  military  tribunal  composed  of  gentlemen  not  trained  to 
the  profession  of  the  law. 

The  prisoner  was  discharged 
See  also  Hawaii  v.  Mankichi,  page  245. 


Section  2. 
CIVIL  RIGHTS. 

CIVIL  RIGHTS  CASES. 
109  U.  S.,  3.    1883. 

The  Act  of  Congress  of  March  1,  1875,  known  as  the  Civil  Rights 
Act,  made  it  a  criminal  offense  for  any  person  to  deny  any  citizen 
on  account  of  race  or  color  the  full  and  equal  enjoyment  of  the  priv- 
ileges and  accommodations  of  inns,  public  conveyances,  theatres, 
and  other  places  of  public  amusement.  Certain  persons  were  in- 
dicted for  violations  of  this  act,  and  carried  these  cases  to  the  Su- 
preme Court  of  the  United  States  in  order  to  test  the  constitution- 
ality of  this  act,  their  contention  being  that,  as  the  Constitution  and 
its  Amendments  do  not  authorize  Congress  to  regulate  private  rights, 
the  indictments  under  the  act  of  1875  were  void.  The  government 
contended  that  the  act  was  authorized  by  the  1st  section  of  the 
Fourteenth  Amendment,  which  declares,  "No  State  shall  make  or 
enforce  any  law  which  shall  abridge  the  privileges  and  immunities 
of  the  citizens  of  the  United  States;  nor  shall  any  State  deprive 
any  person  of  life,  liberty  or  property  without  due  process  of  law; 
nor  deny  to  any  person  within  its  jurisdiction  the  equal  protection 
of  the  laws." 

MR.  JUSTICE  BRADLEY,  speaking  in  reference  to  the  1st  section  of 
the  Fourteenth  Amendment,  says : 

It  is  State  action  of  a  particular  character  that  is  prohibited.  In- 
dividual invasion  of  individual  rights  is  not  the  subject-matter  of 


274  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

the  amendment.  It  has  a  deeper  and  broader  scope.  It  nullifies  and 
makes  void  all  State  legislation,  and  State  action  of  every  kind, 
which  impairs  the  privileges  and  immunities  of  citizens  of  the  United 
States,  or  which  injures  them  in  life,  liberty,  or  property  without 
due  process  of  law,  or  which  denies  to  any  of  them  the  equal  pro- 
tection of  the  laws.  It  not  only  does  this,  but,  in  order  that  the  na- 
tional will,  thus  declared,  may  not  be  a  mere  brutum  fulmen,  the 
last  section  of  the  amendment  invests  Congress  with  power  to  en- 
force it  by  appropriate  legislation.  To  enforce  what?  To  enforce 
the  prohibition.  To  adopt  appropriate  legislation  for  correcting  the 
effects  of  such  prohibited  State  laws  and  State  acts,  and  thus  to  ren- 
der them  effectually  null,  void,  and  innocuous.  This  is  the  legis- 
lative power  conferred  upon  Congress,  and  this  is  the  whole  of  it. 
It  does  not  invest  Congress  with  power  to  legislate  upon  subjects 
which  are  within  the  domain  of  State  legislation;  but  to  provide 
modes  of  relief  against  State  legislation,  or  State  action,  of  the 
kind  referred  to.  It  does  not  authorize  Congress  to  create  a  code  of 
municipal  laws  for  the  regulation  of  private  rights ;  but  to  privide 
modes  of  redress  against  the  operation  of  State  laws,  and  the  action 
of  State  officers,  executive  or  judicial,  when  these  are  subversive  of 
the  fundamental  rights  specified  in  the  amendment.  Positive  rights 
and  privileges  are  undoubtedly  secured  by  the  Fourteenth  Amend 
ment ;  but  they  are  secured  by  way  of  prohibition  against  State  laws 
and  State  proceedings  affecting  those  rights  and  privileges,  and  by 
power  given  to  Congress  to  legislate  for  the  purpose  of  carrying 
such  prohibition  into  effect;  and  such  legislation  must  necessarily 
be  predicted  upon  such  supposed  State  laws  or  State  proceedings, 
and  be  directed  to  the  correction  of  their  operation  and  effect. 

In  the  present  case,  until  some  State  law  has  been  passed,  or  some 
State  action  through  its  officers  or  agents  has  been  taken,  adverse  to 
the  rights  of  citizens  sought  to  be  protected  by  the  Fourteenth 
amendment,  no  legislation  of  the  United  States  under  said  amend- 
ment, nor  any  proceeding  under  such  legislation,  can  be  called  into 
activity ;  for  the  prohibitions  of  the  amendment  are  against  State 
laws  and  acts  done  under  State  authority.  Of  course,  legislation 
may,  and  should  be,  provided  in  advance  to  meet  the  exigency  when 
it  arises ;  but  it  should  be  adapted  to  the  mischief  and  wrong  which 
the  amendment  was  intended  to  provide  against;  and  that  is,  State 
laws,  or  State  action  of  some  kind,  adverse  to  the  rights  of  the  citi- 
zen secured  by  the  amendment.  Such  legislation  cannot  properly 
cover  the  whole  domain  of  rights  appertaining  to  life,  liberty  and 
property,  defining  them  and  providing  for  their  vindication.  That 
would  be  to  establish  a  code  of  municipal  law  regulative  of  all  pri- 
vate rights  between  man  and  man  in  society.  It  would  be  to  make 
Congress  take  the  place  of  the  State  legislatures  and  to  supersede 
them.  It  is  absurd  to  affirm  that,  because  the  rights  of  life,  liberty 
and  property  (which  include  all  civil  rights  that  men  have),  are  by 
the  amendment  sought  to  be  protected  against  invasion  on  the  part 
of  the  State  without  due  process  of  law,  Congress  may  therefore 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  275 

provide  due  process  of  law  for  their  vindication  in  every  case;  and 
that,  because  the  denial  by  a  State  to  any  persons  of  the  equal  pro- 
tection of  the  laws  is  prohibited  by  the  amendment,  therefore  Con- 
gress may  establish  laws  for  their  equal  protection.  In  fine,  the  leg- 
islation which  Congress  is  authorized  to  adopt  in  this  behalf  is  not 
general  legislation  upon  the  rights  of  the  citizen,  but  corrective  leg- 
islation, that  is,  such  as  may  be  necessary  and  proper  for  counter- 
acting such  laws  as  the  States  may  adopt  or  enforce,  and  which,  by 
the  amendment,  they  are  prohibited  from  making  or  enforcing,  or 
such  acts  and  proceedings  as  the  States  may  commit  or  take,  and 
which,  by  the  amendment,  they  are  prohibited  from  committing  or 
taking. 

(The  court  comes  to  the  conclusion  that  the  act  in  question  is  not 
directed  against  any  particular  State  action,  and  therefore  is  not 
within  the  power  conferred  on  Congress  by  the  amendment.) 


Section  3. 

STATE  LAWS  IMPAIRING  THE  OBLIGATION  OF 
CONTRACTS. 

Article  I,  Section  10,  of  the  Constitution  of  the  United  States  pro- 
vides "That  no  State  shall  pass  any  law  impairing  the  obligation  of 
contracts" 

DARTMOUTH  COLLEGE  v.  WOODWARD. 
4  WHEATON,  518.    1819. 

Dartmouth  College  in  New  Hampshire  had  a  charter  granted  by 
the  British  crown  in  1769,  by  which  twelve  persons  were  incorpor- 
ated as  trustees  and  granted  appropriate  privileges  and  powers  to 
conduct  the  affairs  of  the  college,  with  authority  to  fill  all  vacancies 
in  their  own  body.  In  1816  the  New  Hampshire  Legislature  at- 
tempted to  alter  this  charter  by  increasing  the  number  of  trustees, 
the  additional  members  to  be  appointed  by  the  governor,  and  placed 
the  more  important  acts  of  the  trustees  under  the  control  of  a  board 
of  overseers.  The  trustees  acting  under  the  old  charter  brought  an 
action  of  trover  against  Woodward,  who  was  secretary  of  the  body, 
claiming  to  act  under  the  State  law,  for  the  recovery  of  certain  of 
the  college  records  and  documents.  The  question  to  be  decided  was 
whether  the  statutes  of  New  Hampshire  were  invalid  as  impairing 
the  obligation  of  the  contract  involved  in  the  original  charter.  The 
case  was  carried  to  the  Supreme  Court  of  the  United  States. 

MR.  CHIEF  JUSTICE  MARSHALL  delivered  the  opinion  of  the  court. 

*  *  *  *  This  is  plainly  a  contract  to  which  the  donors,  the 
trustees,  and  the  crown  (to  whose  rights  and  obligations  New  Hamp- 


276  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

shire  succeeds)  were  the  original  parties.  It  is  a  contract  made  on 
a  valuable  consideration.  It  is  a  contract  for  the  security  and  dis- 
position of  property.  It  is  a  contract  on  the  faith  of  which  real  and 
personal  estate  has  been  conveyed  to  the  corporation.  It  is  then 
a  contract  within  the  letter  of  the  Constitution,  and  within  its  spirit 
also,  unless  the  fact  that  the  property  is  invested  by  the  donors  in 
trustees,  for  the  promotion  of  religion  and  education,  for  the  benefit 
of  persons  who  are  perpetually  changing,  though  the  objects  remain 
the  same,  shall  create  a  particular  exception,  taking  this  case  out  of 
the  prohibition  contained  in  the  Constitution. 

It  is  more  than  possible  that  the  preservation  of  rights  of  this 
description  was  not  particularly  in  the  view  of  the  framers  of  the 
Constitution,  when  the  clause  under  consideration  was  introduced 
into  that  instrument.  It  is  probable  that  interferences  of  more  fre- 
quent recurrence,  to  which  the  temptation  was  stronger,  and  of 
which  the  mischief  was  more  extensive,  constituted  the  great  motive 
for  imposing  this  restriction  on  the  State  legislatures.  But  although 
a  particular  and  a  rare  case  may  not,  in  itself,  be  of  sufficient  mag- 
nitude to  induce  a  rule,  yet  it  must  be  governed  by  the  rule,  when 
established,  unless  some  plain  and  strong  reason  for  excluding  it 
can  be  given.  It  is  not  enough  to  say,  that  this  particular  case  was 
not  in  the  mind  of  the  convention  when  the  article  was  framed,  nor 
of  the  American  people  when  it  was  adopted.  It  is  necessary  to  go 
further,  and  to  say  that,  had  this  particular  case  been  suggested,  the 
language  would  have  been  so  varied  as  to  exclude  it,  or  it  would 
have  been  made  a  special  exception.  The  case  being  within  the 
words  of  the  rule,  must  be  within  its  operation  likewise,  unless  there 
be  something  in  the  literal  construction  so  obviously  absurd  or  mis- 
chievous, or  repugnant  to  the  general  spirit  of  the  instrument,  as  to 
justify  those  who  expound  the  Constitution  in  making  it  an  excep- 
tion. 

The  opinion  of  the  court,  after  mature  deliberation,  is,  that  this  is 
a  contract  the  obligation  of  which  cannot  be  impaired  without  vio- 
lating the  Constitution  of  the  United  States.  This  opinion  appears 
to  us  to  be  equally  supported  by  reason,  and  by  the  former  decisions 
of  this*  court. 

2.  We  next  proceed  to  the  inquiry,  whether  its  obligations  has 
been  impaired  by  those  acts  of  the  legislature  of  New  Hampshire  to 
which  the  special  verdict  refers. 

From  the  review  of  this  charter  which  has  been  taken,  it  appears 
that  the  whole  power  of  governing  the  college,  of  appointing  and 
removing  tutors,  of  fixing  their  salaries,  of  directing  the  course  of 
study  to  be  pursued  by  the  students,  and  of  filling  up  vacancies  cre- 
ated in  their  own  body,  was  vested  in  the  trustees.  On  the  part  of 
the  crown,  it  was  expressly  stipulated  that  this  corporation,  thus 
constituted,  should  continue  forever ;  and  that  the  number  of  trustees 
should  forever  consist  of  twelve,  and  no  more.  By  this  contract  the 
crown  was  bound,  and  could  have  made  no  violent  alteration  in  its 
essential  terms  without  impairing  its  obligation.  *  *  *  * 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  277 

On  the  effect  of  this  law,  two  opinions  cannot  be  entertained. 
Between  acting  directly,  and  acting  through  the  agency  of  trustees 
and  overseers,  no  essential  difference  is  perceived.  The  whole  power 
of  governing  the  college  is  transferred  from  trustees,  appointed  ac- 
cording to  the  will  of  the  founder,  expressed  in  the  charter,  to  the 
executive  of  New  Hampshire.  The  management  and  application  of 
the  funds  of  this  eleemosynary  institution,  which  are  placed  by  the 
donors  in  the  hands  of  trustees  named  in  the  charter,  and  empow- 
ered to  perpetuate  themselves,  are  placed  by  this  act  under  the  con- 
trol of  the  government  of  the  State.  The  will  of  the  State  is  sub- 
stituted for  the  will  of  the  donors,  in  every  essential  operation  of  the 
college.  This  is  not  an  immaterial  change.  The  founders  of  the 
college  contracted  not  merely  for  the  perpetual  application  of  the 
funds  which  they  gave  to  the  objects  for  which  those  funds  were 
given ;  they  contracted,  also,  to  secure  that  application  by  the  con- 
stitution of  the  corporation.  They  contracted  for  a  system  which 
should,  as  far  as  human  foresight  can  provide,  retain  forever  the 
government  of  the  literary  institution  they  had  formed,  in  the  hands 
of  persons  approved  by  themselves.  This  system  it  totally  changed. 
The  charter  of  1769  exists  no  longer.  It  is  reorganized;  and  reor- 
ganized in  such  a  manner  as  to  convert  a  literary  institution,  mould- 
ed according  to  the  will  of  its  founders,  and  placed  under  the  control 
of  private  literary  men,  into  a  machine  entirely  subservient  to  the 
will  of  government.  This  may  be  for  the  advantage  of  this  college 
in  particular,  and  may  be  for  the  advantage  of  literature  in  general ; 
but  it  is  not  according  to  the  will  of  the  donors,  and  is  subversive 
of  that  contract  on  the  faith  of  which  their  property  was  given.  *  *  * 

It  results,  from  this  opinion,  that  the  acts  of  the  legislature  of 
New  Hampshire,  which  are  stated  in  the  special  verdict  found  in 
this  cause,  are  repugnant  to  the  Constitution  of  the  United  States ; 
and  that  the  judgment  on  this  special  verdict  ought  to  have  been  for 
the  plaintiffs.  The  judgment  of  the  State  Court  must,  therefore,  be 

Reversed. 


THE  BINGHAMPTON  BRIDGE. 
3  WALL.,  51.     1865. 

The  Chenango  Bridge  Company  was  chartered  in  1808  by  the 
State  of  New  York  to  build  and  maintain  a  bridge  over  the  Che- 
nango River  at  Binghampton,  the  charter  containing  a  covenant  that 
no  other  bridge  should  be  built  within  a  distance  of  two  miles  either 
way  from  the  company's  bridge.  In  1855  the  State  of  New  York  au- 
thorized the  Binghampton  Bridge  Company  to  build  a  bridge  across 
the  Chenango  River  within  the  prescribed  limits,  which  bridge  was 
built  and  opened  for  travel,  whereupon  the  Chenango  Bridge  Com- 
pany sought  to  enjoin  the  Binghampton  Bridge  Company  from  using 


278  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

the  bridge,  claiming  that  the  State's  charter  to  the  latter  company  was 
a  law  impairing  the  obligation  of  contracts  and  hence  repugnant  to 
the  Constitution  of  the  United  States.  The  case  was  taken  to  the 
Supreme  Court  of  the  United  States. 

MR.  JUSTICE  DAVIS  delivered  the  opinion  of  the  court. 

*  *  *  *  The  constitutional  right  of  one  legislature  to 
grant  corporate  privileges  and  franchises,  so  as  to  bind  and  con- 
clude a  succeeding  one,  has  been  denied.  We  have  supposed,  if 
anything  was  settled  by  an  unbroken  course  of  decisions  in  the  Fed- 
eral and  State  courts,  it  was  that  an  act  of  incorporation  was  a  con- 
tract between  the  State  and  the  stockholders.  All  courts  at  this  day 
are  estopped  from  questioning  the  doctrine.  The  security  of  prop- 
erty rests  upon  it,  and  every  successful  enterprise  is  undertaken  in 
the  unshaken  belief  that  it  will  never  be  forsaken. 

A  departure  from  it  now  would  involve  dangers  to  society  that 
cannot  be  foreseen,  would  shock  the  sense  of  justice  of  the  country, 
unhinge  its  business  interests,  and  weaken,  if  not  destroy,  that  re- 
spect which  has  always  been  felt  for  the  judicial  department  of  the 
government.  An  attempt  even  to  reaffirm  it  could  only  tend  to  lessen 
its  force  and  obligation.  It  received  its  ablest  exposition  in  the  case 
of  Dartmouth  College  v.  Woodward,  4  Wheat.  518,  which  case  has 
ever  since  been  considered  a  landmark  by  the  profession,  and  no 
court  has  since  disregarded  the  doctrine,  that  the  charters  of  private 
corporations  are  contracts,  protected  from  invasion  by  the  Constitu- 
tion of  the  United  States.  And  it  has  since  so  often  received  the 
solemn  sanction  of  this  court,  that  it  would  unnecessarily  lengthen 
this  opinion  to  refer  to  the  cases,  or  even  enumerate  them. 

The  principle  is  supported  by  reason  as  well  as  authority.  It  was 
well  remarked  by  the  chief  justice  in  the  Dartmouth  College  case, 
"that  the  objects  for  which  a  corporation  is  created  are  universally 
such  as  the  government  wishes  to  promote.  They  are  deemed  bene- 
ficial to  the  country,  and  this  benefit  constitutes  the  consideration, 
and  in  most  cases  the  sole  consideration  for  the  grant."  The  pur- 
poses to  be  attained  are  generally  beyond  the  ability  of  individual 
enterprise,  and  can  only  be  accomplished  through  the  aid  of  asso- 
ciated wealth.  This  will  not  be  risked  unless  privileges  are  given  and 
securities  furnished  in  an  act  of  incorporation.  The  wants  of  the 
public  are  often  so  imperative,  that  a  duty  is  imposed  on  government 
to  provide  for  them;  and  as  experience  has  proved  that  a  State 
should  not  directly  attempt  to  do  this,  it  is  necessary  to  confer  on 
others  the  faculty  of  doing  what  the  sovereign  power  is  unwilling 
to  undertake.  The  legislature,  therefore,  says  to  public-spirited 
citizens:  "If  you  will  embark,  with  your  time,  money,  and  skill,  in 
an  enterprise  which  will  accommodate  the  public  necessities,  we  will 
grant  to  you,  for  a  limited  period,  or  in  perpetuity,  privileges  that 
will  justify  the  expenditure  of  your  money,  and  the  employment  of 
your  time  and  skill."  Such  a  grant  is  a  contract,  with  mutual  con- 


SELECTED  CASES  IN  CONSTITUTION AI  LAW,  279 

siderations,  and  justice  and  good  policy  alike  require  that  the  protec- 
tion of  the  law  should  be  assured  to  it. 

Judgment  was  given  for  the  Chenango  Bridge  Company. 

Note. — Most  State  Constitutions  adopted  since  this  decision  provide  that 
all  charters  granted  by  the  State  are  subject  to  the  right  of  the  State  to  alter, 
amend  and  repeal  the  same. 


BOSTON  BEER  COMPANY  v.  MASSACHUSETTS. 
97  U.  S.,  25.    1877. 

The  charter  of  the  Boston  Beer  Company,  granted  in  1828,  gave 
it  the  privilege  of  manufacturing  malt  liquors  in  Boston.  In  1869 
Massachusetts  passed  a  prohibitory  liquor  law  which  prohibited 
the  manufacture  and  sale  of  intoxicating  liquors  anywhere  within 
the  State.  Under  this  law  a  seizure  was  made  of  certain  malt 
liquors  of  the  Boston  Beer  Company.  The  company  contended  that 
the  seizure  was  illegal  because  the  Act  of  1869  impaired  the  obli- 
gation of  the  contract  contained  in  its  charter  of  1828,  in  violation 
of  the  contract  clause  of  the  Constitution  of  the  United  States.  The 
Supreme  Court  of  Massachusetts  decided  adversely  to  the  Beer 
Company,  whereupon  a  writ  of  error  was  prosecuted  to  the  Supreme 
Court  of  the  United  States. 

MR.  JUSTICE  BRADLEY  delivered  the  opinion  of  the  court. 

The  plaintiff  in  error  was  incorporated  "for  the  purpose  of  manu- 
facturing malt  liquors  in  all  their  varieties,"  it  is  true;  and  the 
right  to  manufacture,  undoubtedly,  as  the  plaintiff's  counsel  con- 
tends, included  the  incidental  right  to  dispose  of  the  liquors  manu- 
factured. But  although  this  right  or  capacity  was  thus  granted  in 
the  most  unqualified  form,  it  cannot  be  construed  as  conferring  any 
greater  or  more  sacred  right  than  any  citizen  had  to  manufacture 
malt  liquor;  nor  as  exempting  the  corporation  from  any  control 
therein  to  which  a  citizen  would  be  subject,  if  the  interests  of  the 
community  should  require  it.  If  the  public  safety  or  the  public 
morals  require  the  discontinuance  of  any  manufacture  or  traffic,  the 
hand  of  the  legislature  cannot  be  stayed  from  providing  for  its  dis- 
continuance, by  any  incidental  inconvenience  which  individuals  or 
corporations  may  suffer.  All  rights  are  held  subject  to  the  police 
power  of  the  State. 

We  do  not  mean  to  say  that  property  actually  in  existence,  and 
in  which  the  right  of  the  owner  has  become  vested,  may  be  taken 
for  the  public  good  without  due  compensation.  But  we  infer  that 
the  liquor  in  this  case,  as  in  the  case  of  Bartemeyer  v.  Iowa,  18 
Wall.  129,  was  not  in  existence  when  the  liquor  law  of  Massachu- 
setts was  passed.  Had  the  plaintiff  in  error  relied  on  the  existence 
of  the  property  prior  to  the  law,  it  behooves  it  to  show  that  fact. 
But  no  such  fact  is  shown,  and  no  such  point  is  taken.  The  plain- 
tiff in  error  boldly  takes  the  ground  that,  being  a  corporation,  it 


28o  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

has  a  right,  by  contract,  to  manufacture  and  sell  beer  forever,  not- 
withstanding and  in  spite  of  any  exigencies  which  may  occur  in  the 
morals  or  the  health  of  the  community  requiring  such  manufacture 
to  cease.  We  do  not  so  understand  the  rights  of  the  plaintiff.  The 
legislature  had  no  power  to  confer  any  such  rights. 

Whatever  differences  of  opinion  may  exist  as  to  the  extent  and 
boundaries  of  the  police  power,  and  however  difficult  it  may  be  to 
render  a  satisfactory  definition  of  it,  there  seems  to  be  no  doubt 
that  it  does  extend  to  the  protection  of  the  lives,  health  and  prop- 
erty of  the  citizens,  and  'to  the  preservation  of  good  order  and  the 
public  morals.  The  legislature  cannot,  by  any  contract,  divest  itself 
of  the  power  to  provide  for  these  objects.  They  belong  emphatically 
to  that  class  of  objects  which  demand  the  application  of  the  maxim, 
solus  populi  suprema  lex;  and  they  are  to  be  attained  and  provided 
for  by  such  appropriate  means  as  the  legislative  discretion  may 
devise.  That  discretion  can  no  more  be  bargained  away  than  the 
power  itself.  Boyd  v.  Alabama,  94  U.  S.  645. 

Since  we  have  already  held,  in  the  case  of  Bartemeyer  v.  Iowa, 
that  as  a  measure  of  police  regulation,  looking  to  the  preservation 
of  public  morals,  a  State  law  prohibiting  the  manufacture  and  sale 
of  intoxicating  liquors  is  not  repugnant  to  any  clause  of  the  Consti- 
tution of  the  United  States,  we  see  nothing  in  the  present  case  that 
can  afford  any  sufficient  ground  for  disturbing  the  decision  of  the 
Supreme  Court  of  Massachusetts. 


Section  4  " 

i 

THE  EQUAL  PROTECTION  OF  THE  LAWS. 

The  Fourteenth  Amendment  to  the  Constitution  of  the  United 
States  provides  "Nor  shall  any  State  deprive  any  person  of  life,  lib- 
erty or  property  without  due  process  of  law;  nor  deny  to  any  person 
within  its  jurisdiction  the  equal  protection  of  the  laws/' 

BARBIER  v.  CONNOLLY. 
113  U.  S.,  27.     1885. 

An  ordinance  of  the  city  of  San  Francisco  relating  to  the  regula- 
tion and  inspection  of  public  laundries  and  wash-houses,  among 
other  things,  provided  that  no  person  owning  or  employed  in  a  public 
laundry  or  public  wash-house  within  certain  prescribed  city  limits 
should  wash  or  iron  clothes  between  the  hours  of  ten  in  the  eve- 
ning and  six  in  the  morning  or  on  Sunday.  Barbier  was  convicted 
under  the  ordinance  of  washing  and  ironing  clothes  in  a  public  laun- 
dry within  the  prescribed  limits,  between  the  hours  of  ten  o'clock 
in  the  evening  of  May  1,  1884,  and  six  o'clock  the  following  day, 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  281 

and  was  sentenced  to  the  county  jail  for  five  days  in  accordance 
with  the  terms  of  the  ordinance.  Barbier  petitioned  for  his  dis- 
charge on  the  ground  that  the  city  ordinance  violated  the  Four- 
teenth Amendment  to  the  Constitution,  in  that  the  ordinance  dis- 
criminated between  laborers  engaged  in  the  laundry  business  and 
those  engaged  in  other  kinds  of  business;  that  it  discriminated  be- 
tween laborers  beyond  the  prescribed  city  limits  and  those  within 
them,  etc.  The  case  was  brought  to  the  United  States  Supreme 
Court  on  a  writ  of  error. 

MR.  JUSTICE  FIELD  delivered  the  opinion  of  the  court. 

*  *  *  *  That  fourth  section,  so  far  as  it  is  involved  in  the 
case  before  the  police  judge,  was  simply  a  prohibition  to  carry  on  the 
washing  and  ironing  of  clothes  in  public  laundries  and  wash-houses, 
within  certain  prescribed  limits  of  the  city  and  county,  from  ten 
o'clock  at  night  until  six  o'clock  on  the  morning  of  the  following 
day.  The  prohibition  against  labor  on  Sunday  is  not  involved.  The 
provision  is  purely  a  police  regulation  within  the  competency  of  any 
municipality  possessed  of  the  ordinary  powers  belonging  to  such 
bodies.  And  it  would  be  an  extraordinary  usurpation  of  the  authority 
of  a  municipality,  if  a  Federal  tribunal  should  undertake  to  supervise 
such  regulations.  It  may  be  a  necessary  measure  of  precaution  in  a 
city  composed  largely  of  wooden  buildings  like  San  Francisco,  that 
occupations  in  which  fires  are  constantly  required  should  cease  after 
certain  hours  at  night  until  the  following  morning;  and  of  the 
necessity  of  such  regulations  the  municipal  bodies  are  the  exclusive 
judges ;  at  least  any  corrections  of  their  action  in  such  matters  can 
come  only  from  State  legislation  or  State  tribunals.  The  same 
municipal  authority  which  directs  the  cessation  of  labor  must  neces- 
sarily prescribe  the  limits  within  which  it  shall  be  enforced,  as  it 
does  the  limits  in  a  city  within  which  wooden  buildings  cannot  be 
constructed.  There  is  no  invidious  discrimination  against  any  one 
within  the  prescribed  limits  by  such  regulations.  There  is  none  in 
the  regulation  under  consideration.  The  specification  of  the  limits 
within  which  the  business  cannot  be  carried  on  without  the  certifi- 
cates of  the  health  officer  and  board  of  fire  wardens  is  merely  a 
designation  of  the  portion  of  the  city  in  which  the  precautionary 
measures  against  fire  and  to  secure  proper  drainage  must  be  taken 
for  the  public  health  and  safety.  It  is  not  legislation  discrimi- 
nating against  any  one.  All  persons  engaged  in  the  same  business 
within  it  are  treated  alike;  are  subject  to  the  same  restrictions  and 
are  entitled  to  the  same  privileges  under  similar  conditions. 

The  Fourteenth  Amendment,  in  declaring  that  no  State  "shall 
deprive  any  person  of  life,  liberty,  or  property  without  due  process 
of  law,  nor  deny  to  any  person  within  its  jurisdiction  the  equal 
protection  of  the  laws,"  undoubtedly  intended  not  only  that  there 
should  be  no  arbitrary  deprivation  of  life  or  liberty,  or  arbitrary 
spoliation  of  property,  but  that  equal  protection  and  security  should 
be  given  to  all  under  like  circumstances  in  the  enjoyment  of  their 
personal  and  civil  rights ;  that  all  persons  should  be  equally  entitled 


ni 


•*••"*  fo 

IDtTAll    rMT    i  M-rr-ir-nv  i  * -r-i>^ 


282  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

to  pursue  their  happiness  and  acquire  and  enjoy  property;  that  they 
should  have  like  access  to  the  courts  of  the  country  for  the  protec- 
tion of  their  persons  and  property,  the  prevention  and  redress  of 
wrongs,  and  the  enforcement  of  contracts;  that  no  impediment 
should  be  interposed  to  the  pursuits  of  any  one  except  as  applied 
to  the  same  pursuits  by  others  under  like  circumstances ;  that  no 
greater  burdens  should  be  laid  upon  one  than  are  laid  upon  others 
in  the  same  calling  and  condition,  and  that  in  the  administration  of 
criminal  justice  no  different  or  higher  punishment  should  be  imposed 
upon  one  than  such  as  is  prescribed  to  all  for  like  offences.  But 
neither  the  amendment — broad  and  comprehensive  as  it  is — nor 
any  other  amendment  was  designed  to  interfere  with  the  power  of 
the  State,  sometimes  termed  its  police  power,  to  prescribe  regulations 
to  promote  the  health,  peace,  morals,  education,  and  good  order  of 
the  people,  and  to  legislate  so  as  to  increase  the  industries  of  the 
State,  develop  its  resources,  and  add  to  its  \*aalth  and  prosperity. 
From  the  very  necessities  of  society,  legislation  of  a  special  char- 
acter, having  these  objects  in  view,  must  often  be  had  in  certain 
districts,  such  as  for  draining  marshes  and  irrigating  arid  plains. 
Special  burdens  are  often  necessary  for  general  benefits, — for 
supplying  water,  preventing  fires,  lighting  districts,  cleaning  streets, 
opening  parks,  and  many  other  objects.  Regulations  for  these 
purposes  may  press  with  more  or  less  weight  upon  one  than  upon 
another,  but  they  are  designed,  not  to  impose  unequal  or  unneces- 
sary restrictions  upon  any  one,  but  to  promote,  with  as  little  indi- 
vidual inconvenience  as  possible,  the  general  good.  Though,  in 
many  respects,  necessarily  special  in  their  character,  they  do  not 
furnish  just  ground  of  complaint  if  they  operate  alike  upon  all 
persons  and  property  under  the  same  circumstances  and  conditions. 
Class  legislation,  discriminating  against  some  and  favoring  others, 
is  prohibited;  but  legislation  which,  in  carrying  out  a  public  pur- 
pose, is  limited  in  its  application,  if  within  the  sphere  of  its  opera- 
tion it  affects  alike  all  persons  similarly  situated,  is  not  within  the 
amendment.  *  *  * 

Judgment  affirmed. 


YICK  WO  v.  HOPKINS. 
118U.  S.  356.     1885. 

The  plaintiff  in  error  was  a  native  of  China  named  Yick  Wo, 
who  was  found  guilty  by  a  Police  Judge's  Court  of  violating  an 
ordinance  of  the  city  of  San  Francisco,  providing  that  it  should  be 
unlawful  for  any  person  to  engage  in  the  laundry  business  within 
the  city  limits  "without  having  first  obtained  the  consent  of  the 
Board  of  Supervisors,  except  same  be  located  in  a  building  con- 
structed either  of  brick  or  stone."  Yick  Wo  was  fined  $10,  and 
in  default  of  payment  was  sentenced  to  the  county  jail  for  ten 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  283 

days.  He  petitioned  to  the  Supreme  Court  of  California  for  the 
writ  of  habeas  corpus,  alleging  that  he  was  illegally  deprived  of 
his  personal  liberty  by  the  defendant,  Hopkins,  who  was  Sheriff 
of  the  City  and  County  of  San  Francisco.  The  State  court  dis- 
charged the  writ  and  remanded  Yick  Wo  to  prison.  The  case  was 
then  brought  into  the  Supreme  Court  of  the  United  States  on  a 
writ  of  error. 

A  similar  case  regarding  a  Chinese  subject  named  Wo  Lee  was 
brought  into  the  Supreme  Court  from  the  Circuit  Court  of  the 
United  States  for  the  District  of  California  and  was  argued  and 
decided  at  the  same  time  with  the  Yick  Wo  case. 

The  evidence  introduced  in  the  lower  court  showed  that  the  city 
authorities  in  enforcing  the  ordinance  discriminated  against  the 
Chinese. 

MR.  JUSTICE  MILLER  delivered  the  opinion  of  the  court. 

*  *  *  *  The  Fourteenth  Amendment  to  the  Constitution  is 
not  confined  to  the  protection  of  citizens.  It  says:  "Nor  shall 
any  State  deprive  any  person  of  life,  liberty,  or  property  without 
due  process  of  law;  nor  deny  to  any  person  within  its  jurisdiction 
the  equal  protection  of  the  laws."  These  provisions  are  universal 
in  their  application,  to  all  persons  within  the  territorial  jurisdiction, 
without  regard  to  any  differences  of  race,~of  color,  or  of  nationality ; 
and  the  equal  protection  of  the  laws  is  a  pledge  of  the  protection  of 
equal  laws.  It  is  accordingly  enacted  by  section  1977  of  the  Re- 
vised Statutes  that  "all  persons  within  the  jurisdiction  of  the 
United  States  shall  have  the  same  right  in  every  State  and  Territory 
to  make  and  enforce  contracts,  to  sue,  be  parties,  give  evidence,  and 
to  the  full  and  equal  benefit  of  all  laws  and  proceedings  for  the 
security  of  persons  and  property  as  is  enjoyed  by  white  citizens  and 
shall  be  subject  to  like  punishment,  pains,  penalties,  taxes,  licenses, 
and  exactions  of  every  kind,  and  to  no  other."  The  questions  we 
have  to  consider  and  decide  in  these  cases,  therefore,  are  to  be 
treated  as  involving  the  rights  of  every  citizen  of  the  United  States 
equally  with  those  of  the  strangers  and  aliens  who  now  invoke  the 
jurisdiction  of  the  court. 

It  is  contended  on  the  part  of  the  petitioners  that  the  ordinances 
for  violations  of  which  they  are  severally  sentenced  to  imprison- 
ment are  void  on  their  face,  as  being  within  the  prohibitions  of 
the  Fourteenth  Amendment;  and,  in  the  alternative,  if  not  so,  that 
they  are  void  by  reason  of  their  administration,  operating  unequally, 
so  as  to  punish  in  the  present  petitioners  what  is  permitted  to  others 
as  lawful,  without  any  distinction  of  circumstances — an  unjust  and 
illegal  discrimination,  it  is  claimed,  which,  though  not  made  ex- 
pressly by  the  ordinances,  is  made  possible  by  them. 

When  we  consider  the  nature  and  the  theory  of  our  institutions 
of  government,  the  principles  upon  which  they  are  supposed  to  rest, 
and  review  the  history  of  their  development,  we  are  constrained  to 
conclude  that  they  do  not  mean  to  leave  room  for  the  play  and 


284  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

action  of  purely  personal  and  arbitrary  power.  Sovereignty  itself 
is,  of  course,  not  subject  to  law,  for  it  is  the  author  and  source  of 
law;  but  in  our  system,  while  sovereign  powers  are  delegated  to 
the  agencies  of  government,  sovereignty  itself  remains  with  the 
people,  by  whom  and  for  whom  all  government  exists  and  acts. 
And  the  law  is  the  definition  and  limitation  of  power.  It  is,  indeed, 
quite  true,  that  there  must  always  be  lodged  somewhere,  and  in 
some  person  or  body,  the  authority  of  final  decision;  and  in  many 
cases  of  mere  administration  the  responsibility  is  purely  political, 
no  appeal  lying  except  to  the  ultimate  tribunal  of  the  public  judg- 
ment, exercised  either  in  the  pressure  of  opinion  or  by  means  of  the 
suffrage.  But  the  fundamental  rights  to  life,  liberty,  and  the  pur- 
suit of  happiness,  considered  as  individual  possessions,  are  secured 
by  those  maxims  of  constitutional  law  which  are  the  monuments 
snowing  the  victorious  progress  of  the  race  in  securing  to  men  the 
blessings  of  civilization  under  the  reign  of  just  and  equal  laws,  so 
that,  in  the  famous  language  of  the  Massachusetts  Bill  of  Rights, 
the  government  of  the  Commonwealth  "may  be  a  government  of 
laws  and  not  of  men."  For  the  very  idea  that  one  man  may  be 
compelled  to  hold  his  life,  or  the  means  of  living,  or  any  material 
right  essential  to  the  enjoyment  of  life,  at  the  mere  will  of  another, 
seems  to  be  intolerable  in  any  country  where  freedom  prevails,  as 
being  the  essence  of  slavery  itself.  *  *  *  * 

In  the  present  cases  we  are  not  obliged  to  reason  from  the  prob- 
able to  the  actual,  and  pass  upon  the  validity  of  the  ordinances  com- 
plained of,  as  tried  merely  by  the  opportunities  which  their  terms 
afford,  of  unequal  and  unjust  discrimination  in  their  administration. 
For  the  cases  present  the  ordinances  in  actual  operation,  and  the 
facts  shown  establish  an  administration  directed  so  exclusively 
against  a  particular  class  of  persons  as  to  warrant  and  require  the 
conclusion,  that,  whatever  may  have  been  the  intent  of  the  ordi- 
nances as  adopted,  they  are  applied  by  the  public  authorities  charged 
with  their  administration,  and  thus  representing  the  State  itself, 
with  a  mind  so  unequal  and  oppressive  as  to  amount  to  a  practical 
denial  by  the  State  of  that  equal  protection  of  the  laws  which  is 
secured  to  the  petitioners,  as  to  all  other  persons,  by  the  broad  and 
benign  provisions  of  the  Fourteenth  Amendment  to  the  Constitution 
of  the  United  States.  Though  the  law  itself  be  fair  on  its  face  and 
impartial  in  appearance,  yet,  if  it  is  applied  and  administered  by 
public  authority  with  an  evil  eye  and  an  unequal  hand,  so  as  prac- 
tically to  make  unjust  and  illegal  discriminations  between  persons 
in  similar  circumstances,  material  to  their  rights,  the  denial  of 
equal  justice  is  still  within  the  prohibition  of  the  Constitution. 
This  principle  of  interpretation  has  been  sanctioned  by  this  court  in 
Henderson  v.  Mayor  of  New  York,  92  U.  S.  259 ;  Chy  Lung  v. 
Freeman,  92  U.  S.  275 ;  Ex  parte  Virginia,  100  U.  S.  339 ;  Neal  v. 
Delaware,  103  U.  S.  370;  and  Soon  King  v.  Crowley,  113  U.  S.  703. 
The  present  cases,  as  shown  by  the  facts  disclosed  in  the  record, 
are  within  this  class.  It  appears  that  both  petitioners  have  com- 
plied with  every  requisite,  deemed  by  the  law  or  by  the  public 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  285 

officers  charged  with  its  administration,  necessary  for  the  protection 
of  neighboring  property  from  fire,  or  as  a  precaution  against  injury 
to  the  public  health.  No  reason  whatever,  except  the  will  of  the 
supervisors,  is  assigned  why  they  should  not  be  permitted  to  carry 
on,  in  the  accustomed  manner,  their  harmless  and  useful  occupation, 
on  which  they  depend  for  a  livelihood.  And  while  this  consent  of 
the  supervisors  is  withheld  from  them  and  from  two  hundred  others 
who  have  also  petitioned,  all  of  whom  happen  to  be  Chinese  subjects, 
eighty  others,  not  Chinese  subjects,  are  permitted  to  carry  on  the 
same  business  under  similar  conditions.  The  fact  of  this  discrim- 
ination is  admitted.  No  reason  for  it  is  shown,  and  the  conclusion 
cannot  be  resisted,  that  no  reason  for  it  exists  except  hostility  to 
the  race  and  nationality  to  which  the  petitioners  belong,  and  which 
in  the  eye  of  the  law  is  not  justified.  The  discrimination  is,  there- 
fore, illegal,  and  the  public  administration  which  enforces  it  is  a 
denial  of  the  equal  protection  of  the  laws  and  a  violation  of  the 
Fourteenth  Amendment  of  the  Constitution.  The  imprisonment  of 
the  petitioners  is,  therefore,  illegal,  and  they  must  be  discharged. 
To  this  end, 

The  judgment  of  the  Supreme  Court  of  California  in  the  case 
of  Yick  Wo,  and  that  of  the  Circuit  of  the  United  Stated 
for  the  District  of  California  in  the  case  of  Wo  Lee,  are  sever- 
ally reversed,  and  the  cases  remanded,  each  to  the  proper 
court,  with  directions  to  discharge  the  petitioners  from  cus- 
tody and  imprisonment. 


Section  5. 

DUE  PROCESS  OF  LAW  AND  ITS  RELATION  TO  THE 
POLICE  POWER. 

The  14th  Amendment  to  the  Constitution  provides:  "Nor  shall 
any  State  deprive  any  person  of  life,  liberty  or  property,  without 
due  process  of  law." 

MUGLER  v.  KANSAS. 
123  U.  S.,  623.    1887. 

The  State  of  Kansas  in  1880  adopted  a  constitution  which  pro- 
hibited in  one  of  its  sections  the  manufacture  and  sale  of  intoxicat- 
ing liquors  except  for  medicinal,  scientific  and  mechanical  purposes. 
In  1881  by  statute  the  manufacture  or  sale,  except  for  the  specified 
purposes  was  made  a  misdemeanor,  and  it  was  further  provided 
that  no  one  should  sell  for  either  of  the  excepted  purposes  without 
having  secured  a  druggist's  permit  therefor.  Mugler  was  con- 
victed of  manufacturing  and  also  selling  without  a  permit.  His  con- 
viction was  affirmed  by  the  Supreme  Court  of  Kansas  and  the  case 


286  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

was  brought  into  the  United  States  Supreme  Court  on  a  writ  of 
error. 

MR.  JUSTICE  HARLAN  delivered  the  opinion  of  the  court. 

*  *  *  *  The  facts  necessary  to  a  clear  understanding  of  the 
questions,  common  to  these  cases,  are  the  following :  Mugler  and  Zie- 
bold  &  Hagelin  were  engaged  in  manufacturing  beer  at  their  respec- 
tive establishments  (constructed  specially  for  that  purpose)  for  sev- 
eral years  prior  to  the  adoption  of  the  constitutional  amendment  of 
1880.  They  continued  in  such  business  in  defiance  of  the  statute 
of  1881,  and  without  having  the  required  permit.  Nor  did  Mugler 
have  a  license  or  permit  to  sell  beer.  The  single  sale  of  which  he 
was  found  guilty  occurred  in  the  State,  and  after  May  1,  1881,  that 
is,  after  the  Act  of  February  19,  1881,  took  effect,  and  was  of  beer 
manufactured  before  its  passage. 

The  buildings  and  machinery  constituting  these  breweries  are  of 
little  value  if  not  used  for  the  purpose  of  manufacturing  beer ;  that 
is  to  say,  if  the  statutes  are  enforced  against  the  defendants  the 
value  of  their  property  will  be  very  materially  diminished. 

The  general  question  in  each  case  is,  whether  the  foregoing  stat- 
utes of  Kansas  are  in  conflict  with  that  clause  of  the  Fourteenth 
Amendment  which  provides  that  "no  State  shall  make  or  enforce 
any  law  which  shall  abridge  the  privileges  or  immunities  of  citi- 
zens of  the  United  States ;  nor  shall  any  State  deprive  any  person 
of  life,  liberty  or  property,  without  due  process  of  law." 

That  legislation  by  a  State  prohibiting  the  manufacture  within 
her  limits  of  intoxicating  liquors,  to  be  there  sold  or  bartered  for 
general  use  as  a  beverage,  does  not  necessarily  infringe  any  right, 
privilege  or  immunity  secured  by  the  Constitution  of  the  United 
States,  is  made  clear  by  the  decisions  of  this  court,  rendered  before 
and  since  the  adoption  of  the  Fourteenth  Amendment;  to  some  of 
which,  in  view  of  questions  to  be  presently  considered,  it  will  be 
well  to  refer.  *  *  *  * 

Keeping  in  view  these  principles,  as  governing  the  relations  of 
the  judicial  and  legislative  departments  of  government  with  each 
other,  it  is  difficult  to  perceive  any  ground  for  the  judiciary  to 
declare  that  the  prohibition  by  Kansas  of  the  manufacture  or  sale, 
within  her  limits,  of  intoxicating  liquors  for  general  use  there  as  a 
beverage,  is  not  fairly  adapted  to  the  end  of  protecting  the  com- 
munity against  the  evils  which  confessedly  result  from  the  excessive 
use  of  ardent  spirits.  There  is  no  justification  for  holding  that  the 
State,  under  the  guise  merely  of  police  regulations,  is  here  aiming 
to  deprive  the  citizen  of  his  constitutional  rights ;  for  we  cannot 
shut  out  of  view  the  fact,  within  the  knowledge  of  all,  that  the  public 
health,  the  public  morals,  and  the  public  safety  may  be  endangered 
by  the  general  use  of  intoxicating  drinks;  nor  the  fact,  established 
by  statistics  accessible  to  every  one,  that  the  idleness,  disorder,  pau- 
perism, and  crime  existing  in  the  country  are,  in  some  degree  at 
least,  traceable  to  this  evil.  If,  therefore,  a  State  deems  the  abso- 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  287 

lute  prohibition  of  the  manufacture  and  sale,  within  her  limits,  of 
intoxicating  liquors  for  other  than  medical,  scientific  and  manufac- 
turing purposes,  to  be  necessary  to  the  peace  and  security  of  society, 
the  courts  cannot,  without  usurping  legislative  functions,  override 
the  wills  of  the  people  as  thus  expressed  by  their  chosen  represent- 
atives. They  have  nothing  to  do  with  the  mere  policy  of  legisla- 
tion. Indeed,  it  is  a  fundamental  principle  in  our  institutions, 
indispensable  to  the  preservation  of  public  liberty,  that  one  of  the 
separate  departments  of  government  shall  not  usurp  powers  com- 
mitted by  the  Constitution  to  another  department.  And  so,  if,  in 
the  judgment  of  the  legislature,  the  manufacture  of  intoxicating 
liquors  for  the  maker's  own  use,  as  a  beverage,  would  tend  to 
cripple,  if  it  did  not  defeat,  the  efforts  to  guard  the  community 
against  the  evils  attending  the  excessive  use  of  such  liquors,  it  is 
not  for  the  courts,  upon  their  views  as  to  what  is  best  and  safest 
for  the  community,  to  disregard  the  legislative  determination  of 
that  question.  So  far  from  such  a  regulation  having  no  relation 
to  the  general  end  sought  to  be  accomplished,  the  entire  scheme  of 
prohibition,  as  embodied  in  the  constitution  and  laws  of  Kansas, 
might  fail,  if  the  right  of  each  citizen  to  manufacture  intoxicating 
liquors  for  his  own  use  as  a  beverage  were  recognized.  Such  a  right 
does  not  inhere  in  citizenship.  Nor  can  it  be  said  that  government 
interferes  with  or  impairs  any  one's  constitutional  rights  of  liberty 
or  of  property,  when  it  determines  that  the  manufacture  and  sale 
of  intoxicating  drinks,  for  general  or  individual  use,  as  a  beverage, 
are,  or  may  become,  hurtful  to  society,  and  constitute,  therefore, 
a  business  in  which  no  one  may  lawfully  engage.  Those  rights  are 
best  secured,  in  our  government,  by  the  observance,  upon  the  part 
of  all,  of  such  regulations  as  are  established  by  competent  authority 
to  promote  the  common  good.  No  one  may  rightfully  do  that  which 
the  law-making  power,  upon  reasonable  grounds,  declares  to  be  pre- 
judicial to  the  general  welfare. 

This  conclusion  is  unavoidable,  unless  the  Fourteenth  Amend- 
ment of  the  Constitution  takes  from  the  States  of  the  Union  those 
powers  of  police  that  were  reserved  at  the  time  the  original  Consti- 
tution was  adopted.  But  this  court  has  declared,  upon  full  consid- 
eration, in  Barbier  v.  Connolly,  113  U.  S.  27,  31,  that  the  Fourteenth 
Amendment  had  no  such  effect.  After  observing,  among  other 
things,  that  that  amendement  forbade  the  arbitrary  deprivation  of 
life  or  liberty,  and  the  arbitrary  spoliation  of  property,  and  secured 
equal  protection  to  all  under  like  circumstances,  in  respect  as  well 
to  their  personal  and  civil  rights  as  to  their  acquisition  and  enjoy- 
ment of  property,  the  court  said:  "But  neither  the  amendement,— 
broad  and  comprehensive  as  it  is, — nor  any  other  amendment,  was 
designed  to  interfere  with  the  power  of  the  State,  sometimes  termed 
its  'police  power,'  to  prescribe  regulations  to  promote  the  health, 
peace,  morals,  education,  and  good  order  of  the  people,  and  to 
legislate  so  as  to  increase  the  industries  of  the  State,  develop  its 
resources,  and  add  to  .its  wealth  and  prosperity." 

Upon  this  ground — if  we  do  not  misapprehend  the  position  of 


288  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

defendants — it  is  contended  that,  as  the  primary  and  principal  use 
of  beer  is  as  a  beverage ;  as  their  respective  breweries  were  erected 
when  it  was  lawful  to  engage  in  the  manufacture  of  beer  for  every 
purpose ;  as  such  establishments  will  become  of  no  value  as  property, 
or,  at  least,  will  be  materially  diminished  in  value,  if  not  employed 
in  the  manufacture  of  beer  for  every  purpose ;  the  prohibition  upon 
their  being  so  employed  is,  in  effect,  a  taking  of  property  for  public 
use  without  compensation,  and  depriving  the  citizen  of  his  property 
without  due  process  of  law.  In  other  words,  although  the  State,  in 
the  exercise  of  her  police  powers,  may  lawfully  prohibit  the  manu- 
facture and  sale,  within  her  limits,  of  intoxicating  liquors  to  be 
used  as  a  beverage,  legislation  having  that  object  in  view  cannot  be 
enforced  against  those  who,  at  the  time,  happen  to  own  property, 
the  chief  value  of  which  consists  in  its  fitness  for  such  manufactur- 
ing purposes,  unless  compensation  is  first  made  for  the  diminution 
in  the  value  of  their  property,  resulting  from  such  prohibitory  en- 
actments. 

This  interpretation  of  the  Fourteenth  Amendment  is  inadmis- 
sible. It  cannot  be  supposed  that  the  States  intended,  by  adopting 
that  amendment,  to  impose  restraints  upon  the  exercise  of  their 
powers  for  the  protection  of  the  safety,  health,  or  morals  of  the 
community.  In  respect  to  contracts,  the  obligations  of  which  are 
protected  against  hostile  State  legislation,  this  court  in  Butchers' 
Union  Co.  v.  Crescent  City  Co.,  Ill .  U.  S.  746,  751,  said  that  the 
State  could  not,  by  any  contract,  limit  the  exercise  of  her  power  to 
the  prejudice  of  the  public  health  and  the  public  morals.  So,  in 
Stone  v.  Mississippi,  101  U.  S.  814,  816,  where  the  Constitution  was 
invoked  against  the  repeal  by  the  State  of  a  charter,  granted  to  a 
private  corporation,  to  conduct  a  lottery,  and  for  which  that  corpo- 
ration paid  to  the  State  a  valuable  consideration  in  money,  the  court 
said:  "No  legislature  can  bargain  away  the  public  health  or  the 
public  morals.  The  people  themselves  cannot  do  it,  much  less  their 
servants.  .  .  .  Government  is  organized  with  a  view  to  their 
preservation,  and  cannot  divest  itself  of  the  power  to  provide  for 
them."  *  *  *  * 

As  already  stated,  the  present  case  must  be  governed  by  princi- 
ples that  do  not  involve  the  power  of  eminent  domain,  in  the  exer- 
cise of  which  property  may  not  be  taken  for  public  use  without 
compensation.  A  prohibition  simply  upon  the  use  of  property  for 
purposes  that  are  declared,  by  valid  legislation,  to  be  injurious  to 
the  health,  morals,  or  safety  of  the  community,  cannot,  in  any  just 
sense,  be  deemed  a  taking  or  an  appropriation  of  property  for  the 
public  benefit.  Such  legislation  does  not  disturb  the  owner  in  the 
control  or  use  of  his  property  for  lawful  purposes,  nor  restrict  his 
right  to  dispose  of  it,  but  is  only  a  declaration  by  the  State  that 
its  use  by  any  one,  for  certain  forbidden  purposes,  is  prejudicial  to 
the  public  interests.  Nor  can  legislation  of  that  character  come 
within  the  Fourteenth  Amendment,  in  any  case,  unless  it  is  apparent 
that  its  real  object  is  not  to  protect  the  community,  or  to  promote 
the  general  well-being,  but,  under  the  guise  of  police  regulation,  to 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  289 

deprive  the  owner  of  his  liberty  and  property,  without  due  process 
of  law.  The  power  which  the  States  have  of  prohibiting  such  use 
by  individuals  of  their  property  as  will  be  prejudicial  to  the  health, 
the  morals,  or  the  safety  of  the  public,  is  not — and,  consistently 
with  the  existence  and  safety  of  organized  society,  cannot  be — 
burdened  with  the  condition  that  the  State  must  compensate  such 
individual  owners  for  pecuniary  losses  they  may  sustain,  by  reason 
of  their  not  being  permitted,  by  a  noxious  use  of  their  property, 
to  inflict  injury  upon  the  community.  The  exercise  of  the  police 
power  by  the  destruction  of  property  which  is  itself  a  public  nui- 
sance, or  the  prohibition  of  its  use  in  a  particular  way,  whereby 
its  value  becomes  depreciated,  is  very  different  from  taking  property 
for  public  use,  or  from  depriving  a  person  of  his  property  without 
due  process  of  law.  In  the  one  case,  a  nuisance  only  is  abated ;  in 
the  other,  unoffending  property  is  taken  away  from  an  innocent 
owner. 

It  is  true,  that,  when  the  defendants  in  these  cases  purchased  or 
erected  their  breweries,  the  laws  of  the  State  did  not  forbid  the 
manufacture  of  intoxicating  liquors.  But  the  State  did  not  thereby 
give  any  assurance,  or  come  under  an  obligation,  that  its  legislation 
upon  that  subject  would  remain  unchanged.  Indeed,  as  was  said 
in  Stone  v.  Mississippi,  101  U.  S.  814,  the  supervision  of  the  public 
health  and  the  public  morals  is  a  governmental  power,  "continuing 
in  its  nature,"  and  "to  be  dealt  with  as  the  special  exigencies  of 
the  moment  may  require;"  and  that,  "for  this  purpose,  the  largest 
legislative  discretion  is  allowed,  and  the  discretion  cannot  be  parted 
with  any  more  than  the  power  itself."  So  in  Beer  Co.  v.  Massa- 
chusetts, 97  U.  S.  32:  "If  the  public  safety  or  the  public  morals 
require  the  discontinuance  of  any  manufacture  or  traffic,  the  hand 
of  the  legislature  cannot  be  stayed  from  providing  for  its  discontin- 
uance by  any  incidental  inconvenience  which  individuals  or  corpo- 
rations may  suffer." 

Judgment  affirmed. 


MUNN  v.  ILLINOIS. 
94  U.  S.,  113.    1876. 

An  Illinois  statute  provided  that  any  person  operating  warehouses 
and  elevators  wherein  grain  or  other  property  is  stored  within  any 
city  of  more  than  one  hundred  thousand  population  should  procure 
a  license  from  the  County  court  permitting  him  to  transact  business 
as  a  public  warehouseman,  and  provided  for  a  maximum  charge  for 
the  storage  and  handling  of  grain  received  into  such  warehouse  or 
elevator.  Munn  was  convicted  of  operating  a  grain  elevator  and 
warehouse  within  the  city  of  Chicago  without  a  license.  He  was  fined 
in  accordance  with  the  provisions  of  the  statute  and  appealed  to 
the  Supreme  Court  of  Illinois,  which  court  affirmed  the  judgment 


290  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

below.  He  then  sued  out  a  writ  of  error  to  the  United  States  Su- 
preme Court,  his  contention  being  that  the  Illinois  statute  was  re- 
pugnant to  the  Fourteenth  Amendment  to  the  Constitution  of  the 
United  States  which  provides  that  no  State  shall  "deprive  any  per- 
son of  life,  liberty,  or  property  without  due  process  of  law,  nor 
deny  to  any  person  within  its  jurisdiction  the  equal  protection  of  the 
laws." 

MR.  CHIEF  JUSTICE  WAITE  delivered  the  opinion  of  the  court. 

When  one  becomes  a  member  of  society,  he  necessarily  parts  with 
some  rights  or  privileges  which,  as  an  individual  not  affected  by 
his  relations  to  others,  he  might  retain.  "A  body  politic,"  as  aptly 
defined  in  the  preamble  of  the  constitution  of  Massachusetts,  "is  a 
social  compact  by  which  the  whole  people  covenants  with  each 
citizen,  and  each  citizen  with  the  whole  people,  that  all  shall  be 
governed  by  certain  laws  for  the  common  good."  This  does  not 
confer  power  upon  the  whole  people  to  control  rights  which  are 
purely  and  exclusively  private  (Thorpe  v.  R.  &  B.  Railroad  Co., 
27  Vt.  143)  ;  but  it  does  authorize  the  establishment  of  laws  requiring 
each  citizen  to  so  conduct  himself,  and  so  use  his  own  property,  as 
not  unnecessarily  to  injure  another.  This  is  the  very  essence  of 
government,  and  has  found  expression  in  the  maxim  sic  'utere  tuo 
tit  alienum  non  laedas.  From  this  source  come  the  police  powers, 
which,  as  was  said  by  Mr.  Chief  Justice  Taney  in  the  License 
Cases,  5  How.  583,  "are  nothing  more  or  less  than  the  powers  of 
government  inherent  in  every  sovereignty,  .  .  .  that  is  to  say, 
.  .  .  the  power  to  govern  men  and  things."  Under  these  powers 
the  government  regulates  the  conduct  of  its  citizens  one  towards 
another,  and  the  manner  in  which  each  shall  use  his  own  property, 
when  such  regulation  becomes  necessary  for  the  public  good.  In 
their  exercise  it  has  been  customary  in  England  from  time  imme- 
morial, and  in  this  country  from  its  first  colonization,  to  regulate 
ferries,  common  carriers,  hackmen,  bakers,  millers,  wharfingers, 
innkeepers,  etc.,  and  in  so  doing  to  fix  a  maximum  of  charge  to  be 
made  for  services  rendered,  accommodations  furnished,  and  articles 
sold.  To  this  day,  statutes  are  to  be  found  in  many  of  the  States 
upon  some  or  all  these  subjects ;  and  we  think  it  has  never  yet  been 
successfully  contended  that  such  legislation  came  within  any  of  the 
constitutional  prohibitions  against  interference  with  private  prop- 
erty. With  the  Fifth  Amendment  in  force,  Congress,  in  1820,  con- 
ferred power  upon  the  city  of  Washington  "to  regulate  .  .  .  the 
rates  of  wharfage  at  private  wharves,  .  .  .  the  sweeping  of  chim- 
neys, and  to  fix  the  rates  of  fees  therefor,  .  .  .  and  the  weight  and 
quality  of  bread"  (3  Stat.  587,  sect.  7)  ;  and,  in  1848,  "to  make  all 
necessary  regulations  respecting  hackney  carriages  and  the  rates 
of  fare  of  the  same,  and  the  rates  of  hauling  by  cartmen,  wagoners, 
carmen,  and  draymen,  and  the  rates  of  commission  of  auctioneers" 
(9  Stat.  224,  sect.  2). 

From  this  it  is  apparent  that,  down  to  the  time  of  the  adoption  of 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  291 

the  Fourteenth  Amendment,  it  was  not  supposed  that  statutes  regu- 
lating the  use,  or  even  the  price  of  the  use,  of  private  property 
necessarily  deprived  an  owner  of  his  property  without  due  process 
of  law.  Under  some  circumstances  they  may,  but  not  under  all. 
The  amendment  does  not  change  the  law  in  this  particular ;  it  simply 
prevents  the  States  from  doing  that  which  will  operate  as  such  a 
deprivation.  *  *  *  * 

It  matters  not  in  this  case  that  these  plaintiffs  in  error  had  built 
their  warehouses  and  established  their  business  before  the  regula- 
tions complained  of  were  adopted.  What  they  did  was  from  the 
beginning  subject  to  the  power  of  the  body  politic  to  require  them 
to  conform  to  such  regulations  as  might  be  established  by  the  proper 
authorities  for  the  common  good.  They  entered  upon  their  busi- 
ness and  provided  themselves  with  the  means  to  carry  it  on  subject 
to  this  condition.  If  they  did  not  wish  to  submit  themselves  to 
such  interference,  they  should  not  have  clothed  the  public  with  an 
interest  in  their  concerns.  The  same  principle  applies  to  them  that 
does  to  the  proprietor  of  a  hackney-carriage,  and  as  to  him  it  has 
never  been  supposed  that  he  was  exempt  from  regulating  statutes 
or  ordinances  because  he  had  purchased  his  horses  and  carriage  and 
established  his  business  before  the  statute  or  the  ordinance  was 
adopted. 

It  is  insisted,  however,  that  the  owner  of  property  is  entitled  to 
a  reasonable  compensation  for  its  use,  even  though  it  be  clothed 
with  a  public  interest,  and  that  what  is  reasonable  is  a  judicial  and 
not  a  legislative  question. 

As  has  already  been  shown,  the  practice  has  been  otherwise.  In 
countries  where  the  common  law  prevails,  it  has  been  customary 
from  time  immemorial  for  the  legislature  to  declare  what  shall  be 
a  reasonable  compensation  under  such  circumstances,  or,  perhaps 
more  properly  speaking,  to  fix  a  maximum  beyond  which  any  charge 
made  would  be  unreasonable.  Undoubtedly,  in  mere  private  con- 
tracts, relating  to  matters  in  which  the  public  has  no  interest,  what 
is  reasonable  must  be  ascertained  judicially.  But  this  is  because 
the  legislature  has  no  control  over  such  a  contract.  So,  too,  in 
matters  which  do  affect  the  public  interest,  and  as  to  which  legis- 
lative control  may  be  exercised,  if  there  are  no  statutory  regulations 
upon  the  subject,  the  courts  must  determine  what  is  reasonable. 
The  controlling  fact  is  the  power  to  regulate  at  all.  If  that  exists, 
the  right  to  establish  the  maximum  of  charge,  as  one  of  the  means 
of  regulation,  is  implied.  In  fact,  the  common-law  rule,  which  re- 
quires the  charge  to  be  reasonable,  is  itself  a  regulation  as  to  price. 
Without  it  the  owner  could  make  his  rates  at  will,  and  compel  the 
public  to  yield  to  his  terms,  or  forego  the  use.  *  *  *  * 

After  what  has  already  been  said,  it  is  unnecessary  to  refer  at 
length  to  the  effect  of  the  other  provision  of  the  Fourteenth  Amend- 
ment which  is  relied  upon,  viz.,  that  no  State  shall  "deny  to  any 
person  with  its  jurisdiction  the  equal  protection  of  the  laws." 
Certainly,  it  cannot  be  claimed  that  this  prevents  the  State  from 


292  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

regulating  the  fares  of  hackmen  or  the  charges  of  draymen  in 
Chicago,  unless  it  does  the  same  thing  in  every  other  place  within 
its  jurisdiction.  But,  as  has  been  seen,  the  power  to  regulate  the 
business  of  warehouses  depends  upon  the  same  principle  as  the 
power  to  regulate  hackmen  and  draymen,  and  what  cannot  be  done 
in  the  one  case  in  this  particular  cannot  be  done  in  the  other. 

Judgment  affirmed. 


GERMAN  ALLIANCE  INSURANCE  COMPANY  v.  IKE 

LEWIS. 

233  U.  S.  389.     Decided  April  20th,  1914. 

The  State  of  Kansas  in  1909  passed  a  law,  which  requires  every 
Fire  Insurance  Company,  except  domestic  Farmers'  Mutual  Insur- 
ance Companies,  to  file  with  the  Superintendent  of  Insurance 
schedules  showing  rates  of  all  risks  insurable  by  such  company  in 
the  State  and  all  the  conditions  which  affect  the  rates  or  the  value 
of  the  insurance  to  the  insured,  and  gives  the  Superintendent  of 
Insurance  the  power  to  determine  any  rate  excessive  or  unreasonably 
high  or  not  adequate  to  the  safety  or  soundness  of  the  company, 
in  which  case,  and  on  his  authority,  to  direct  the  company  to  publish 
and  file  a  higher  or  lower  rate,  which  shall  be  commensurate  with 
the  character  of  the  risk ;  but  in  every  case  the  rate  shall  be  reason- 
able. The  plaintiff  brought  a  Bill  in  Equity  against  the  said  Super- 
intendent of  Insurance  to  restrain  him  from  enforcing  the  provisions 
of  this  law  on  the  ground  that  the  law  was  an  unconstitutional 
exercise  of  the  police  power  of  the  State  and  contrary  to  the  Four- 
teenth Amendment  to  the  Constitution  of  the  United  States. 

MR.  JUSTICE  McKENNA  delivered  the  opinion  of  the  court. 

The  specific  error  complained  of  is  the  refusal  of  the  district 
court  to  hold  that  the  act  of  the  State  of  Kansas  is  unconstitutional 
and  void  as  offending  the  due  process  clause  of  the  Fourteenth 
Amendment  of  the  Constitution  of  the  United  States.  To  support 
this  charge  of  error,  complainant  asserts  that  the  business  of  fire 
insurance  is  a  private  business,  and,  therefore,  there  is  no  constitu- 
tional power  in  a  State  to  fix  the  rates  and  charges  for  services 
rendered  by  it.  An  exercise  of  such  right,  it  is  contended,  is  a 
taking  of  private  property  for  a  public  use.  The  contention  is  made 
in  various  ways,  and,  excluding  possible  countervailing  contentions, 
it  is  urged  that  the  act  under  review  cannot  be  justified  as  an  exer- 
cise of  the  police  power  or  of  the  power  of  the  State  to  admit 
foreign  corporations  within  its  borders  upon  such  terms  as  it  may 
prescribe,  or  of  any  other  power  possessed  by  the  State;  that  no 
State  has  the  power  to  impose  unconstitutional  burdens  either  upon 
private  citizens  or  private  corporations  engaged  in  a  private  business. 

The  basic  contention  is  that  the  business  of  insurance  is  a  natural 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  293 

right,  receiving  no  privilege  from  the  State,  is  voluntarily  entered 
into,  cannot  be  compelled,  nor  can  any  of  its  exercises  be  compelled ; 
that  it  concerns  personal  contracts  of  indemnity  against  certain  con- 
tingencies merely.  Whether  such  contracts  shall  be  made  at  all,  it 
is  contended,  is  a  matter  of  private  negotiation  and  agreement,  and 
necessarily  there  must  be  freedom  in  fixing  their  terms.  And 
"where  the  right  to  demand  and  receive  service  does  not  exist  in 
the  public,  the  correlative  right  of  regulation  as  to  rates  and  charges 
does  not  exist."  Many  elements,  it  is  urged,  determine  the  extend- 
ing or  rejection  of  insurance;  the  hazards  are  relative  and  depend 
upon  many  circumstances  upon  which  there  may  be  different  judg- 
ments, and  there  are  personal  considerations  as  well — "moral  haz- 
ards," as  they  are  called.  *  *  *  * 

We  may  put  aside,  therefore,  all  merely  adventitious  considera- 
tions and  come  to  the  bare  and  essential  one,  whether  a  contract  of 
fire  insurance  is  private,  and  as  such  has  constitutional  immunity 
from  regulation.  Or,  to  state  it  differently  and  to  express  an  anti- 
thetical proposition,  is  the  business  of  insurance  so  far  affected  with 
a  public  interest  as  to  justify  legislative  regulation  of  its  rates? 
And  we  mean  a  broad  and  definite  public  interest.  In  some  degree 
the  public  interest  is  concerned  in  every  transaction  between  men, 
'  the  sum  of  the  transactions  constituting  the  activities  of  life.  But 
there  is  something  more  special  than  this,  something  of  more  definite 
consequence,  which  makes  the  public  interest  that  justifies  regulatory 
legislation.  We  can  best  explain  by  examples.  The  transportation 
of  property — business  of  common  carriers — is  obviously  of  public 
concern,  and  its  regulation  is  an  accepted  governmental  power.  The 
transmission  of  intelligence  is  of  cognate  character.  There  are  other 
utilities  which  are  denominated  public,  such  as  the  furnishing  of 
water  and  light,  including  in  the  latter  gas  and  electricity.  We  do 
not  hesitate  at  their  regulation  nor  of  the  fixing  of  the  prices  which 
may  be  charged  for  their  service.  The  basis  of  the  ready  concession 
of  the  power  of  regulation  is  the  public  interest.  This  is  not  de- 
nied, but  its  application  to  insurance  is  so  far  denied  as  not  to  extend 
to  the  fixing  of  rates.  It  is  said,  the  State  has  no  power  to  fix 
the  rates  charged  to  the  public  by  either  corporations  or  individuals 
engaged  in  a  private  business,  and  the  "test  of  whether  the  use  is 
public  or  not  is  whether  a  public  trust  is  imposed  upon  the  prop- 
erty, and  whether  the  public  has  a  legal  right  to  the  use  which  cannot 
be  denied ;"  or,  as  we  have  said,  quoting  counsel,  "Where  the  right 
to  demand  and  receive  service  does  not  exist  in  the  public,  the 
correlative  right  of  regulation  as  to  rates  and  charges  does  not 
exist."  Cases  are  cited  which,  it  must  be  admitted,  support  the  con- 
tention. The  distinction  is  artificial.  It  is,  indeed,  but  the  assertion 
that  the  cited  examples  embrace  all  cases  of  public  interest.  The 
complainant  explicitly  so  contends,  urging  that  the  test  it  applies 
excludes  the  idea  that  there  can  be  a  public  interest  which  gives 
the  power  of  regulation  as  distinct  from  a  public  use,  which,  neces- 
sarily, it  is  contended,  can  only  apply  to  property,  not  to  personal 
contracts.  The  distinction,  we  think,  has  no  basis  in  principle, 


294  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

nor  has  the  other  contention  that  the  service  which  cannot  be  de- 
manded cannot  be  regulated.     *     *     *     * 

A  contract  for  fire  insurance  is  one  for  indemnity  against  loss, 
and  is  personal.  The  admission,  however,  does  not  take  us  far  in 
the  solution  of  the  question  presented.  Its  personal  character  cer- 
tainly does  not  of  itself  preclude  regulation,  for  there  are  many 
examples  of  government  regulation  of  personal  contracts,  and  in 
the  statutes  of  every  State  in  the  Union  superintendence  and  control 
over  the  business  of  insurance  are  exercised,  varying  in  details  and 
extent.  We  need  not  particularize  in  detail.  We  need  only  say 
that  there  was  quite  early  (in  Massachusetts,  1837;  New  York, 
1853)  State  provision  for  what  is  known  as  the  unearned  premium 
fund  or  reserve ;  then  came  the  limitation  of  dividends,  the  pub- 
lishing of  accounts,  valued  policies,  standards  of  policies,  prescribing 
investment,  requiring  deposits  in  money  or  bonds,  confining  the 
business  to  corporations,  preventing  discrimination  in  rates,  limita- 
tion of  risks,  and  other  regulations  equally  restrictive.  In  other 
words,  the  State  has  stepped  in  and  imposed  conditions  upon  the 
companies,  restraining  the  absolute  liberty  which  businesses  strictly 
private  are  permitted  to  exercise. 

Those  regulations  exhibit  it  to  be  the  conception  pf  the  lawmaking 
bodies  of  the  country  without  exception  that  the  business  of  insur- 
ance so  far  affects  the  public  welfare  as  to  invoke  and  require  gov- 
ernmental regulation.  A  conception  so  general  cannot  be  without 
cause.  The  universal  sense  of  a  people  cannot  be  accidental ;  its 
persistence  saves  it  from  the  charge  of  unconsidered  impulse,  and 
its  estimate  of  insurance  certainly  has  substantial  basis.  Accidental 
fires  are  inevitable  and  the  extent  of  loss  very  great.  The  effect  of 
insurance — indeed,  it  has  been  said  to  be  its  fundamental  object — 
is  to  distribute  the  loss  over  as  wide  an  area  as  possible.  In  other 
words,  the  loss  is  spread  over  the  country,  the  disaster  to  an  in- 
dividual is  shared  by  many,  the  disaster  to  a  community  shared  by 
other  communities ;  great  catastrophies  are  thereby  lessened,  and,  it 
may  be,  repaired.  In  assimilation  of  insurance  to  a  tax,  the  com- 
panies have  been  said  to  be  the  mere  machinery  by  which  the  in- 
evitable losses  by  fire  are  distributed  so  as  to  fall  as  lightly  as  possi- 
ble on  the  public  at  large,  the  body  of  the  insured,  not  the  companies, 
paying  the  tax.  Their  efficiency,  therefore,  and  solvency,  are  of 
great  concern.  The  other  objects,  direct  and  indirect,  of  insurance, 
we  need  not  mention.  Indeed,  it  may  be  enough  to  say,  without 
stating  other  effects  of  insurance,  that  a  large  part  of  the  country's 
wealth,  subject  to  uncertainty  of  loss  through  fire,  is  protected  by 
insurance.  This  demonstrates  the  interest  of  the  public  in  it,  and 
we  need  not  dispute  with  the  economists  that  this  is  the  result  of 
the  "substitution  of  certain  for  uncertain  loss,"  'or  the  diffusion  of 
positive  loss  over  a  large  group  of  persons,  as  we  have  already 
said  to  be  certainly  one  of  its  effects.  We  can  see,  therefore,  how 
it  has  come  to  be  considered  a  matter  of  public  concern  to  regulate 
it,  and,  governmental  insurance  has  its  advocates  and  even  examples. 
Contracts  of  insurance,  therefore,  have  greater  public  consequence 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  295 

than  contracts  between  individuals  to  do  or  not  to  do  a  particular 
thing  whose  effect  stops  with  the  individuals.     *     *     *     * 

But  it  is  said  that  the  reasoning  of  the  opinion  has  the  broad 
reach  of  subjecting  to  regulation  every  act  of  human  endeavor  and 
the  price  of  every  article  of  human  use.  We  might,  without  much 
concern,  leave  our  discussion  to  take  care  of  itself  against  such  mis- 
understanding or  deductions.  The  principle  we  apply  is  definite 
and  old,  and  has,  as  we  have  pointed  out,  illustrating  examples. 
And  both  by  the  expression  of  the  principle  and  the  citation  of  the 
examples  we  have  tried  to  confine  our  decision  to  the  regulation  of 
the  business  of  insurance,  it  having  become  "clothed  with  a  public 
interest,"  and  therefore  subject  "to  be  controlled  by  the  public  for 
the  common  good." 

If  there  may  be  controversy  as  to  the  business  having  such  char- 
acter, there  can  be  no  controversy  as  to  what  follows  from  such 
character  if  it  be  established.  It  is  idle,  therefore,  to  debate  whether 
the  liberty  of  contract  guaranteed  by  the  Constitution  of  the  United 
States  is  more  intimately  involved  in  price  regulation  than  in  the 
other  forms  of  regulation  as  to  the  validity  of  which  there  is  no 
dispute.  The  order  of  their  enactment  certainly  cannot  be  consid- 
ered an  element  in  their  legality.  It  would  be  very  rudimentary 
to  say  that  measures  of  government  are  determined  by  circum- 
stances, by  the  presence  or  imminence  of  conditions,  and  of  the 
legislative  judgment  of  the  means  or  the  policy  of  removing  or 
preventing  them.  The  power  to  regulate  interstate  commerce  ex- 
isted for  a  century  before  the  interstate  commerce  act  was  passed, 
and  the  Commission  constituted  by  it  was  not  given  authority  to 
fix  rates  until  some  years  afterwards.  Of  the  agencies  which  those 
measures  were  enacted  to  regulate  at  the  time  of  the  creation  of 
the  power,  there  was  no  prophecy  or  conception.  Nor  was  regu- 
lation immediate  upon  their  existence.  It  was  exerted  only  when 
the  size,  number,  and  influence  of  those  agencies  had  so  increased 
and  developed  as  to  seem  to  make  it  imperative.  Other  illustrations 
readily  occur  which  repel  the  intimation  that  the  inactivity  of  a 
power,  however  prolonged,  militates  against  its  legality  when  it  is 
exercised.  United  States  ex  rel.  Atty.  Gen.  v.  Delaware  &  H.  Co. 
213  U.  S.  366.  It  is  oftener  the  existence  of  necessity  rather  than 
the  prescience  of  it  which  dictates  legislation.  And  so  with  the 
regulations  of  the  business  of  insurance.  They  have  proceeded 
step  by  step,  differing  in  different  jurisdictions.  If  we  are  brought 
to  a  comparison  of  them  in  relation  to  the  power  of  government, 
how  can  it  be  said  that  fixing  the  price  of  insurance  is  beyond  that 
power  and  the  other  instances  of  regulation  are  not?  How  can  it 
be  said  that  the  right  to  engage  in  the  business  is  a  natural  one 
when  it  can  be  denied  to  individuals  and  permitted  to  corporations  ? 
How  can  it  be  said  to  have  the  privilege  of  a  private  business  when 
its  dividends  are  restricted,  its  investments  controlled,  the  form  and 
extent  of  its  contracts  prescribed,  discriminations  in  its  rates  denied, 
and  a  limitation  on  its  risks  imposed?  Are  not  such  regulations 
restraints  upon  the  exercise  of  the  personal  right — asserted  to  be 


296  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

fundamental — of  dealing  with  property  freely,  or  engaging  in  what 
contracts  one  may  choose,  and  with  whom  and  upon  what  terms  one 
may  choose? 

We  may  venture  to  observe  that  the  price  of  insurance  is  not 
fixed  over  the  counters  of  the  companies  by  what  Adam  Smith 
calls  the  higgling  of  the  market,  but  formed  in  the  councils  of  the 
underwriters,  promulgated  in  schedules  of  practically  controlling 
constancy  which  the  applicant  for  insurance  is  powerless  to  oppose, 
and  which,  therefore,  has  led  to  the  assertion  that  the  business  of 
insurance  is  of  monopolistic  character  and  that  "it  is  illusory  to 
speak  of  a  liberty  of  contract."  It  is  in  the  alternative  presented 
of  accepting  the  rates  of  the  companies  or  refraining  from  insur- 
ance, business  necessity  impelling  if  not  compelling  it,  that  we  may 
discover  the  inducement  of  the  Kansas  statute;  and  the  problem 
presented  is  whether  the  legislature  could  regard  it  of  as  much 
moment  to  the  public  that  they  who  seek  insurance  should  no  more 
be  constrained  by  arbitrary  terms  than  they  who  seek  transportation 
by  railroads,  steam,  or  street,  or  by  coaches  whose  itinerary  may 
be  only  a  few  city  blocks,  or  who  seek  the  use  of  grain  elevators, 
or  to  be  secured  in  a  night's  accommodation  at  a  wayside  inn,  or 
in  the  weight  of  a  5-cent  loaf  of  bread.  We  do  not  say  this  to 
belittle  such  rights  or  to  exaggerate  the  effect  of  insurance,  but  to 
exhibit  the  principle  which  exists  in  all  and  brings  all  under  the 
same  governmental  power. 

We  have  summarized  the  provisions  of  the  Kansas  statute,  and 
it  will  be  observed  from  them  that  they  attempt  to  systematize  the 
control  of  insurance.  The  statute  seeks  to  secure  rates  which  shall 
be  reasonable  both  to  the  insurer  and  the  insured,  and  as  a  means 
to  this  end  it  prescribes  equality  of  charges,  forbids  initial  dis- 
crimination or  subsequently  by  the  refund  of  a  portion  of  the  rates, 
or  the  extension  to  the  insured  of  any  privilege;  to  this  end  it 
requires  publicity  in  the  basic  schedules  and  of  all  of  the  conditions 
which  affect  the  rates  or  the  value  of  the  insurance  to  the  insured, 
and  also  adherence  to  the  rates  as  published.  Whether  the  require- 
ments are  necessary  to  the  purpose,  or — to  confine  ourselves  to  that 
which  is  under  review — whether  rate  regulation  is  necessary  to  the 
purpose,  is  a  matter  for  legislative  judgment,  not  judicial.  Our 
function  is  only  to  determine  the  existence  of  power. 

The  bill  attacks  the  statute  of  Kansas  as  discriminating  against 
complainant  because  the  statute  excludes  from  its  provisions  farmers' 
mutual  insurance  companies,  organized  and  doing  business  under 
the  laws  of  the  State  and  insuring  only  farm  property.  The  charge 
is  not  discussed  in  the  elaborate  brief  of  counsel,  nor  does  it  seem 
to  have  been  pressed  in  the  lower  court.  It  is,  however,  covered 
by  the  assignments  of  error. 

The  provision  of  the  statute  is,  "That  nothing  in  this  act  shall 
affect  farmers'  mutual  insurance  companies,  organized  and  doing 
business  under  the  laws  of  this  State,  and  insuring  only  farm  prop- 
erty." The  distinction  is  therefore  between  co-operative  insurance 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  297 

companies  insuring  a  special  kind  of  property  and  all  other  insur- 
ance companies.  It  is  only  with  that  distinction  that  we  are  now 
concerned.  There  are  special  provisions  in  the  statutes  of  Kansas 
for  the  organization  of  co-operative  companies,  and  if  the  statute 
under  review  discriminates  between  them  the  German  Alliance  Com- 
pany cannot  avail  itself  of  the  discrimination.  A  citation  of  cases 
is  not  necessary,  nor  for  the  general  principle  that  a  discrimination 
is  valid  if  not  arbitrary,  and  arbitrary  in  the  legislative  sense,  that 
is,  outside  of  that  wide  discretion  which  a  legislature  may  exercise. 
A  legislative  classification  may  rest  on  narrow  distinctions.  Legis- 
lation is  addressed  to  evils  as  they  may  appear,  and  even  degrees  of 
evil  may  determine  its  exercise.  Ozan  Lumber  Co.  v.  Union  County 
Nat.  Bank,  202  U.  S.  623.  There  are  certainly  differences  between 
stock  companies,  such  as  complainant  is,  and  the  mutual  companies 
described  in  the  bill,  and  a  recognition  of  the  differences  we  cannot 
say  is  outside  of  the  constitutional  power  of  the  legislature.  Orient 
Ins.  Co.  v.  Daggs,  172  U.  S.  557.  Decree  affirmed. 

Mr.  Justice  Lamar,  the  Chief  Justice,  and  Mr.  Justice  Van  De- 
vanter  dissented. 


HOLDEN  v.  HARDY. 
169  U.  S.  366.     1898. 

The  plaintiff,  Holden,  was  convicted  of  violating  a  State  statute, 
making  it  a  misdemeanor  for  any  employer  to  employ  workingmen 
in  underground  mines  or  in  smelters,  or  other  institutions  for  the 
reduction  or  refining  of  ores  or  metals,  for  more  than  eight  hours 
per  day  except  in  cases  of  emergency  when  life  or  property  was  in 
imminent  danger.  He  was  given  into  the  custody  of  the  defendant, 
as  sheriff,  and  applied  to  the  Supreme  Court  of  Utah  for  discharge 
on  a  writ  of  habeas  corpus.  His  application  being  refused,  he 
sued  out  a  writ  of  error  to  the  Supreme  Court  of  the  United  States, 
challenging  the  validity  of  the  State  statute  under  which  he  was 
convicted  on  the  ground  that  it  offended  against  the  Fourteenth 
Amendment  to  the  Constitution,  in  that  it  abridged  the  privileges 
and  immunities  of  citizens  of  the  United  States,  depriving  both  the 
employer  and  laborer  of  property  without  due  process  of  law,  and 
denying  them  the  equal  protection  of  the  laws. 

MR.  JUSTICE  BROWN  delivered  the  opinion  of  the  court. 

*  *  *  *  But  if  it  be  within  the  power  of  a  legislature  to 
adopt  such  means  for  the  protection  of  the  lives  of  its  citizens,  it 
is  difficult  to  see  why  precautions  may  not  also  be  adopted  for  the 
protection  of  their  health  and  morals.  It  is  as  much  for  the  interest 
of  the  State  that  the  public  health  should  be  preserved  as  that  life 
should  be  made  secure.  With  this  end  in  view  quarantine  laws  have 
been  enacted  in  most  if  not  all  of  the  States ;  insane  asylums,  public 


298  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

hospitals,  and  institutions  for  the  care  and  education  of  the  blind 
established,  and  special  measures  taken  for  the  exclusion  of  infected 
cattle,  rags,  and  decayed  fruit.  In  other  States  laws  have  been 
enacted  limiting  the  hours  during  which  women  and  children  shall 
be  employed  in  factories ;  and  while  their  constitutionality,  at  least 
as  applied  to  women,  has  been  doubted  in  some  of  the  States,  they 
have  been  generally  upheld.  Thus,  in  the  case  of  Commonwealth  v. 
Hamilton  Manufacturing  Company,  120  Mass.  383,  it  was  held  that 
a  statute  prohibiting  the  employment  of  all  persons  under  the  age 
of  eighteen,  and  of  all  women  laboring  in  any  manufacturing 
establishment  more  than  sixty  hours  per  week,  violates  no  contract 
of  the  Commonwealth  implied  in  the  granting  of  a  charter  to  a 
manufacturing  company  nor  any  right  reserved  under  the  Consti- 
tution to  any  individual  citizen,  and  may  be  maintained  as  a  health 
or  police  regulation. 

Upon  the  principles  above  stated,  we  think  the  act  in  question 
may  be  sustained  as  a  valid  exercise  of  the  police  power  of  the  State. 
The  enactment  does  not  profess  to  limit  the  hours  of  all  workmen, 
but  merely  those  who  are  employed  in  underground  mines,  or  in  the 
smelting,  reduction,  or  refining  of  ores  or  metals.  These  employ- 
ments, when  too  long  pursued,  the  legislature  has  judged  to  be  detri- 
mental to  the  health  of  the  employees,  and,  so  long  as  there  are 
reasonable  grounds  for  believing  that  this  is  so,  its  decision  upon 
this  subject  cannot  be  reviewed  by  the  Federal  courts. 

While  the  general  experience  of  mankind  may  justify  us  in  be- 
lieving that  men  may  engage  in  ordinary  employments  more  than 
eight  hours  per  day  without  injury  to  their  health,  it  does  not  follow 
that  labor  for  the  same  length  of  time  is  innocuous  when  carried 
on  beneath  the  surface  of  the  earth,  where  the  operative  is  deprived 
of  fresh  air  and  sunlight,  and  is  frequently  subjected  to  foul  atmos- 
phere and  a  very  high  temperature,  or  to  the  influence  of  noxious 
gases,  generated  by  the  processes  of  refining  or  smelting.  *  *  *  * 

We  are  of  opinion  that  the  act  in  question  was  a  valid  exercise 
of  the  police  power  of  the  State,  and  the  judgments  of  the  Supreme 
Court  of  Utah  are,  therefore,  Affirmed. 


THE  NORTHWESTERN  FERTILIZING  COMPANY  v.  VIL- 
LAGE OF  HYDE  PARK,  CHAUNCEY  M.  CADY,  ET  AL. 

97  U.  S.  659.     1878. 

The  Northwestern  Fertilizing  Company  was  chartered  by  the 
State  of  Illinois  with  the  right  to  existence  for  a  term  of  fifty 
years,  and  was  empowered  by  its  charter  to  establish  fertilizing 
works  in  Cook  County,  Illinois,  at  any  point  south  of  the  dividing 
line  between  townships  thirty-seven  and  thirty-eight.  The  company 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  299 

built  its  fertilizing  factory  in  the  designated  locality.  When  the 
factory  was  put  there,  the  country  around  about  was  swampy  and 
nearly  uninhabited.  The  evidence  showed  that  this  factory  was 
an  unendurable  nuisance  to  the  inhabitants  for  many  miles  around 
its  location;  that  the  stench  was  intolerable,  producing  nausea  and 
discomfort  and  depreciating  the  value  of  near-by  property.  The 
company  transported  the  offal  used  in  its  factory  through  the 
village  of  Hyde  Park,  which  was  about  a  mile  from  the  factory. 
The  village  was  incorporated  by  a  charter  authorizing  it  to  abate 
a  nuisance,  and  by  ordinance  the  village  forbade  the  transportation 
of  offal  or  other  unwholesome  or  offensive  matter  through  the 
village  and  prohibited  the  maintenance  of  any  offensive  or  un- 
wholesome business  within  the  limits  of  the  village,  or  within  one 
mile  of  those  limits. 

The  company  violated  the  ordinance  and  was  fined  in  accordance 
with  its  provisions.  The  Supreme  Court  of  Illinois  sustained  the 
fine,  whereupon  the  company  brought  the  case  into  the  Supreme 
Court  of  the  United  States,  claiming  that  it  was  protected  by  its 
charter  from  the  enforcement  against  it  of  the  ordinance  com- 
plained of,  and  that  its  charter  was  a  contract  within  the  meaning 
of  the  contract  clause  of  the  Constitution  of  the  United  States. 

MR.  JUSTICE  SWAYNE  delivered  the  opinion  of  the  court. 

In  the  case  before  us  it  does  not  appear  that  the  factory  could 
not  be  removed  to  some  other  place  south  of  the  designated  line, 
where  it  could  be  operated,  and  where  offal  could  be  conveyed  to 
it  from  the  city  by  some  other  railroad,  both  without  rightful 
objection.  The  company  had  the  choice  of  any  point  within  the 
designated  limits.  In  that  respect  there  is  no  restriction. 

The  charter  was  a  sufficient  license  until  revoked;  but  we  cannot 
regard  it  as  a  contract  guaranteeing,  in  the  locality  originally 
selected,  exemption  for  fifty  years  from  the  exercise  of  the  police 
power  of  the  State,  however  serious  the  nuisance  might  become  in 
the  future,  by  reason  of  the  growth  of  population  around  it.  The 
owners  had  no  such  exemption  before  they  were  incorporated,  and 
we  think  the  charter  did  not  give  it  to  them. 

There  is  a  class  of  nuisances  designated  "legalised/'  There  are 
cases  which  rest  for  their  sanction  upon  the  intent  of  the  law  under 
which  they  are  created,  the  paramount  power  of  the  Legislature, 
the  principle  of  "the  greatest  good  for  the  greatest  number,"  and 
the  importance  of  the  public  benefit  and  convenience  involved  in 
their  continuance.  *  *  *  * 

The  decree  of  the  Supreme  Court  of  Illinois  is  affirmed. 


300  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

NOBLE  STATE  BANK  v.  C.  N.  HASKELL,  ET  AL. 
219  U.  S.  104.    1911. 

This  was  a  proceeding  against  the  Governor  of  the  State  of  Okla- 
homa and  other  officials  who  constitute  the  State  Banking  Board  to 
prevent  them  from  levying  and  collecting  an  assessment  from  the 
Noble  State  Bank  under  an  Act  passed  by  the  State  in  1907.  This 
act  creates  the  Board  and  directs  it  to  levy  upon  every  bank  existing 
under  the  Laws  of  the  State  an  assessment  of  1%  of  the  bank's 
average  daily  deposits,  with  certain  daily  deductions,  for  the  purpose 
of  creating  a  depositors'  guaranty  fund.  There  are  provisos  for 
keeping  up  the  fund,  and  by  an  Act  passed  March  llth,  1909,  since 
the  suit  was  begun,  the  assessment  was  raised  to  5%.  The  purpose 
of  the  fund  is  shown  by  its  name.  It  is  to  secure  the  full  repayment 
of  deposits.  When  a  bank  becomes  insolvent  and  goes  into  the  hands 
of  the  bank  commissioner,  if  its  cash  immediately  available  is  not 
enough  to  pay  depositors  in  full,  the  banking  board  is  to  draw  from 
the  depositors'  guaranty  fund  (and  from  additional  assessments  if 
required)  the  amount  needed  to  make  up  the  deficiency.  A  lien  is 
reserved  upon  the  assets  of  the  failing  bank  to  make  good  the  sum 
thus  taken  from  the  fund.  The  plaintiff  said  that  it  was  solvent, 
and  did  not  want  the  help  of  the  guaranty  fund,  and  that  it  could 
not  be  called  upon  to  contribute  toward  securing  or  paying  the  de- 
positors in  other  banks,  consistently  with  Article  I,  Sec.  10,  and  the 
14th  Amendment  of  the  Constitution  of  the  United  States.  The 
petition  was  dismissed  by  the  Supreme  Court  of  the  State. 

MR.  JUSTICE  HOLMES  delivered  the  opinion  of  the  Court: 

The  reference  to  Article  I,  Sec.  10,  does  not  strengthen  the  plain- 
tiff's bill.  The  only  contract  that  it  relies  upon  is  its  charter.  That 
is  subject  to  alteration  or  repeal,  as  usual,  so  that  the  obligation 
hardly  could  be  said  to  be  impaired  by  the  Act  of  1907  before  us, 
unless  that  statute  deprives  the  plaintiff  of  liberty  or  property  with- 
out due  process  of  law.  See  Sherman  v.  Smith,  I  Black,  587. 
Whether  it  does  so  or  not  is  the  only  question  in  the  case. 
*  *  *  *  The  substance  of  the  plaintiff's  (i.  e.,  the  bank's)  argu- 
ment is  that  the  assessment  takes  private  property  for  private  use 
without  compensation.  And  while  we  should  assume  that  the  plain- 
tiff would  retain  a  reversionary  interest  in  its  contribution  to  the 
fund,  so  as  to  be  entitled  to  a  return  of  what  remained  of  it  if  the 
purpose  were  given  up  (see  Danby  Bank  v.  State  Tieasurer,  39  Vt. 
92,  98),  still  there  is  no  denying  that  by  this  law  a  portion  of  its 
property  might  be  taken  without  return  to  pay  debts  of  a  failing 
rival  in  business.  Nevertheless,  notwithstanding  the  logical  form 
of  the  objection,  there  are  more  powerful  considerations  on  the  other 
side.  In  the  first  place,  it  is  established  by  a  series  of  cases  that  an 
ulterior  public  advantage  may  justify  a  comparatively  insignificant 
taking  of  private  property  for  what,  in  its  immediate  purpose,  is  a 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  301 

private  use;  Clark  v.  Nash,  198  U.  S.  361,  etc.  *  *  *  *  And 
in  the  next,  it  would  seem  that  there  may  be  other  cases  besides  the 
everyday  one  of  taxation,  in  which  the  share  of  each  party  in  the 
benefit  of  a  scheme  of  mutual  protection  is  sufficient  compensation 
for  the  correlative  burden  that  it  is  compelled  to  assume.  See  Ohio 
Oil  Co.  v.  Indiana,  177  U.  S.  190,  etc.  *  *  *  *  At  least,  if  we 
have  a  case  within  the  reasonable  exercise  of  the  police  power  as 
above  explained,  no  more  need  be  said. 

It  may  be  said  in  a  general  way  that  the  police  power  extends  to 
all  the  great  public  needs.  Camfield  v.  United  States,  167  U.  S.  518. 
It  may  be  put  forth  in  aid  of  what  is  sanctioned  by  usage,  or  held 
by  the  prevailing  morality  or  strong  and  preponderant  opinion  to 
be  greatly  and  immediately  necessary  to  the  public  welfare.  Among 
matters  of  that  sort  probably  few  would  doubt  that  both  usage  and 
preponderant  opinion  give  their  sanction  to  enforcing  the  primary 
conditions  of  successful  commerce.  One  of  those  conditions  at  the 
present  time  is  the  possibility  of  payment  by  checks  drawn  against 
bank  deposits,  to  such  an  extent  do  checks  replace  currency  in  daily 
business.  If,  then,  the  legislature  of  the  State  thinks  that  the  public 
welfare  requires  the  measure  under  consideration,  analogy  and  prin- 
ciple are  in  favor  of  the  power  to  enact  it.  Even  the  primary  object 
of  the  required  assessment  is  not  a  private  benefit,  as  it  was  in  the 
cases  above  cited  of  a  ditch  for  irrigation  or  a  railway  to  a  mine, 
but  it  is  to  make  the  currency  of  checks  secure,  and  by  the  same 
stroke  to  make  safe  the  almost  compulsory  resort  of  depositors  to 
banks  as  the  only  available  means  for  keeping  money  on  hand.  The 
priority  of  claim  given  to  depositors  is  incidental  to  the  same  object, 
and  is  justified  in  the  same  way.  The  power  to  restrict  liberty  by 
fixing  a  minimum  of  capital  required  of  those  who  would  engage 
in  banking  is  not  denied.  The  power  to  restrict  investments  to 
securities  regarded  as  relatively  safe  seems  equally  plain.  It  has 
been  held,  we  do  not  doubt,  rightly,  that  the  inspections  may  be 
required  and  the  cost  thrown  on  the  bank.  See  Charlotte,  C.  &  \.  R. 
Co.  v.  Gibbes,  142  U.  S.  386.  The  power  to  compel,  beforehand, 
co-operation,  and  thus,  it  is  believed,  to  make  a  failure  unlikely  and 
a  general  panic  almost  impossible,  must  be  recognized,  if  govern- 
ment is  to  do  its  proper  work,  unless  we  can  say  that  the  means 
have  no  reasonable  relation  to  the  end.  Gundling  v.  Chicago,  177 
U.  S.  183,  etc.  *  *  *  *  So  far  is  that  from  being  the  case 
that  the  device  is  a  familiar  one.  It  was  adopted  by  some  States 
the  better  part  of  a  century  ago,  and  seems  never  to  have  been  ques- 
tioned until  now.  Danby  Bank  v.  State  Treasurer,  39  Vt.  92,  etc. 
*  *  *  *  , 

It  is  asked  whether  the  State  could  require  all  corporations  or 
all  grocers  to  help  to  guarantee  each  other's  solvency,  and  where 
we  are  going  to  draw  the  line.  But  the  last  is  a  futile  question,  and 
we  will  answer  the  others  when  they  arise.  With  regard  to  the 
police  power,  as  elsewhere  in  the  law,  lines  are  pricked  out  by  the 
gradual  approach  and  contact  of  decision  on  the  opposing  sides. 
Hudson  County  Water  Co.  v.  McCarter,  209  U.  S.  349.  *  *  *  * 


302  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

It  will  serve  as  a  datum  oh  this  side,  that,  in  our  opinion,  the  statute 
before  us  is  well  within  the  State's  constitutional  power,  while  the 
use  of  the  public  credit  on  a  large  scale  to  help  individuals  in  busi- 
ness has  been  held  to  be  beyond  the  line.  Citizens'  L.  Asso.  v. 
Topeka,  20  Wall.  655  *  *  *  *  The  question  that  we  have 
decided  is  not  much  helped  by  propounding  the  further  one,  whether 
the  right  to  engage  in  banking  is  or  can  be  made  a  franchise.  But 
as  the  latter  question  has  some  bearing  on  the  former,  and  as  it  will 
have  to  be  considered  in  the  following  cases,  if  not  here,  we  will  dis- 
pose of  it  now.  It  is  not  answered  by  citing  authorities  for  the 
existence  of  the  right  at  common  law.  There  are  many  things  that 
a  man  might  do  at  common  law  that  the  States  may  forbid.  He 
might  embezzle  until  a  statute  cut  down  his  liberty.  We  cannot  say 
that  the  public  interests  to  which  we  have  adverted,  and  others,  are 
not  sufficient  to  warrant  the  State  in  taking  the  whole  business  of 
banking  under  its  control.  On  the  contrary,  we  are  of  opinion  that 
it  may  go  on  from  regulation  to  prohibition  except  upon  such  condi- 
tions as  it  may  prescribe.  In  short,  when  the  Oklahoma  Legislature 
declares  by  implication  that  free  banking  is  a  public  danger,  and 
that  incorporation,  inspection,  and  the  above-described  co-operation 
are  necessary  safeguards,  this  court  certainly  cannot  say  that  it  is 
wrong.  *  *  *  *  Some  further  details  might  be  mentioned,  but 
we  deem  them  unnecessary.  Of  course,  objections  under  the  State 
Constitution  are  not  open  here.  Judgement  affirmed. 

Note. — See  also  Minnesota  Rate  Cases,  page  212,  and  as  to  due  process  of 
law  and  its  relation  to  the  taxing  power,  see  McCray  v.  U.  S.,  page  143. 


Section  6. 

THE  GUARANTEE  OF  A  REPUBLICAN  FORM  OF  GOVERN- 
MENT. 

Article  IV,  section  4,  of  the  Constitution  of  the  United  States 
provides:  "The  United  States  shall  guarantee  to  every  State  in 
this  Union  a  Republican  Form  of  Government!' 

THE  OREGON  INITIATIVE  AND  REFERENDUM. 

PACIFIC   STATES  TELEPHONE  &  TELEGRAPH   COM- 
PANY v.  STATE  OF  OREGON. 

223  U.  S.  118  (1912). 

This  case  was  brought  to  the  Supreme  Court  of  the  United  States 
upon  a  writ  of  error  from  the  Supreme  Court  of  the  State  of  Ore- 
gon which  affirmed  a  judgment  of  the  Circuit*  Court  for  Multnomah 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  303 

County  in  that  State  enforcing  a  tax  on  the  gross  revenue  of  a 
domestic  corporation.    The  facts  were  as  follows : 

In  1902  Oregon  amended  its  Constitution.  This  amendment, 
while  retaining  an  existing  clause  vesting  the  exclusive  legislative 
power  in  a  general  assembly  consisting  of  a  senate  and  a  house  of 
representatives,  added  to  that  provision  the  following:  "But  the 
people  reserve  to  themselves  power  to  propose  laws  and  amend- 
ments to  the  Constitution,  and  to  enact  or  reject  the  same  at  the  polls, 
independent  of  the  legislative  assembly,  and  also  reserve  power  at 
their  own  option  to  approve  or  reject  at  the  polls  any  act  of  the 
legislative  assembly."  (Art.  4,  Sec.  1.)  Specific  means  for  the 
exercise  of  the  power  thus  reserved  was  contained  in  further  clauses 
authorizing  both  the  amendment  of  the  Constitution  and  the  enact- 
ment of  laws  to  be  accomplished  by  the  method  known  as  the  initia- 
tive and  that  commonly  referred  to  as  the  referendum.  As  to  the 
first,  the  initiative,  it  suffices  to  say  that  a  stated  number  of  voters 
were  given  the  right  at  any  time  to  secure  a  submission  to  popular 
vote  for  approval  of  any  matter  which  it  was  desired  to  have  en- 
acted into  law,  and  providing  that  the  proposition  thus  submitted, 
when  approved  by  popular  vote,  should  become  the  law  of  the  State. 
The  second,  the  referendum,  provided  for  a  reference  to  a  popular 
vote,  for  approval  or  disapproval,  of  any  law  passed  by  the  legisla- 
ture, such  reference  to  take  place  either  as  the  result  of  the  action  of 
the  legislature  itself,  or  of  a  petition  filed  for  that  purpose  by  a 
specified  number  of  voters. 

In  1903  detailed  provisions  for  the  carrying  into  effect  of  this 
amendment  were  enacted  by  the  legislature. 

By  resort  to  the  initiative  in  1906,  a  law  taxing  certain  classes  of 
corporations  was  submitted,  voted  on,  and  promulgated  by  the  gov- 
ernor in  1907  as  having  been  duly  adopted.  By  this  law  telephone 
and  telegraph  companies  were  taxed,  by  what  was  qualified  as  an 
annual  license,  2  per  centum  upon  their  gross  revenue  derive^  from 
business  done  within  the  State.  Penalties  were  provided  for  non- 
payment, and  methods  were  created  for  enforcing  payment  in  case 
of  delinquency. 

The  Pacific  States  Telephone  &  Telegraph  Company,  an  Oregon 
corporation  engaged  in  business  in  that  State,  made  a  return  of  its 
gross  receipts,  as  required  by  the  statute,  and  was  accordingly  as- 
sessed 2  per  cent,  upon  the  amount  of  such  return.  The  suit  which 
is  now  before  us  was  commenced  by  the  state  to  enforce  payment  of 
this  assessment  and  the  statutory  penalties  for  delinquency.  The 
petition  alleged  the  passage  of  the  taxing  law  by  resort  to  the  initi- 
ative, the  return  made  by  the  corporation,  the  assessment,  the  duty 
to  pay,  and  the  failure  to  make  such  payment. 

The  corporation  contested  the  tax  principally  upon  the  ground 
that  the  creation  by  a  State  of  the  power  to  legislate  by  the  initiative 
and  referendum  caused  the  prior  lawful  State  government  to  be 
bereft  of  its  lawful  character  and  destroyed  all  government  republi- 


304  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

can  in  form  in  Oregon,  within  the  meaning  of  Section  4,  Article  IV, 
of  the  Constitution  of  the  United  States,  providing,  "the  United 
States  shall  guarantee  to  every  State  in  this  Union  a  republican 
form  of  government." 

MR.  CHIEF  JUSTICE  WHITE  delivered  the  opinion  of  the  court. 

*  *  *  *  In  other  words,  the  propositions  each  and  all  pro- 
ceed alone  upon  the  theory  that  the  adoption  of  the  initiative  and 
referendum  destroyed  all  government  republican  in  form  in  Oregon. 
This  being  so,  the  contention,  if  held  to  be  sound,  would  necessarily 
affect  the  validity,  not  only  of  the  particular  statute  which  is  before 
us,  but  of  every  other  statute  passed  in  Oregon  since  the  adoption 
of  the  initiative  and  referendum.  And  indeed,  the  propositions  go 
further  than  this,  since  in  their  essence  they  assert  that  there  is  no 
governmental  function,  legislative  or  judicial,  in  Oregon,  because  it 
cannot  be  assumed,  if  the  proposition  be  well  founded,  that  there  is, 
at  one  and  the  same  time,  one  and  the  same  government,  which  is 
republican  in  form,  and  not  of  that  character.  *  *  *  * 

We  shall  not  stop  to  consider  the  text  to  point  out  how  absolutely 
barren  it  is  of  support  for  the  contentions  sought  to  be  based  upon 
it,  since  the  repugnancy  of  those  contentions  to  the  letter  and  spirit 
of  that  text  is  so  conclusively  established  by  prior  decisions  of  this 
court  as  to  cause  the  matter  to  be  absolutely  foreclosed. 

In  view  of  the  importance  of  the  subject,  the  apparent  misappre- 
hension on  one  side  and  seeming  misconception  on  the  other,  sug- 
gested by  the  argument  as  to  the  full  significance  of  the  previous 
doctrine,  we  do  not  content  ourselves  with  a  mere  citation  of  the 
cases,  but  state  more  at  length  than  we  otherwise  would  the  issues 
and  the  doctrine  expounded  in  the  leading  and  absolutely  controlling 
case, — Luther  v.  Borden,  7  How.  1. 

The  case  came  from  a  circuit  court  of  the  United  States.  It  was 
an  action  of  damages  for  trespass.  The  case  grew  out  of  what  is 
commonly  known  as  the  Dorr  Rebellion  in  Rhode  Island,  and  the 
conflict  which  was  brought  about  by  the  effort  of  the  adherents  of 
that  alleged  government,  sometimes  described  as  "the  government 
established  by  a  voluntary  convention,"  to  overthrow  the  established 
charter  government.  The  defendants  justified  on  the  ground  that 
the  acts  done  by  them,  charged  as  a  trespass,  were  done  under  the 
authority  of  the  charter  government  during  the  prevalence  of  mar- 
tial law,  and  for  the  purpose  of  aiding  in  the  suppression  of  an 
armed  revolt  by  the  supporters  of  the  insurrectionary  government. 
The  plaintiffs,  on  the  contrary,  asserted  the  validity  of  the  volun- 
tary government,  and  denied  the  legality  of  the  charter  government. 
In  the  course  of  the  trial  the  plaintiff,  to  support  the  contention  of 
the  illegality  of  the  charter  government  and  the  legality  of  the  vol- 
untary government,  "although  that  government  never  was  able  to 
exercise  any  authority  in  the  State,  nor  to  command  obedience  to 
rts  laws  or  to  its  officers,"  offered  certain  evidence  tending  to  show 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  305 

that  nevertheless  it  was  "the  lawful  and  established  government," 
upon  the  ground  that  its  powers  to  govern  have  been  ratified  by  a 
large  majority  of  the  male  people  of  the  State  of  the  age  of  twenty- 
one  years  and  upwards,  and  also  by  a  large  majority  of  those  who 
were  entitled  to  vote  for  general  officers  cast  in  favor  of  a  Consti- 
tution which  was  submitted  as  the  result  of  a  voluntarily  assembled 
convention  of  what  was  alleged  to  be  the  people  of  the  State  of 
Rhode  Island.  The  circuit  court  rejected  this  evidence  and  in- 
structed the  jury  that,  as  the  charter  government  was  the  estab- 
lished State  government  at  the  time  the  trespass  occurred,  the  de- 
fendants were  justified  in  acting  under  the  authority  of  that  gov- 
ernment. This  court,  coming  to  review  this  ruling,  at  the  outset 
pointed  out  "the  novelty  and  serious  nature"  of  the  question  which 
it  was  called  upon  to  decide.  Attention  also  was  at  the  inception 
directed  to  the  far-reaching  effect  and  gravity  of  the  consequences 
which  would  be  produced  by  sustaining  the  right  of  the  plaintiff  to 
assail  and  set  aside  the  established  government  by  recovering  dam- 
ages from  the  defendants  for  acts  done  by  them  under  the  authority 
of,  and  for  the  purpose  of  sustaining,  such  established  govern- 
ment. *  *  *  * 

Moreover,  the  Constitution  of  the  United  States,  as  far  as  it  has 
provided  for  an  emergency  of  this  kind  and  authorized  the  general 
government  to  interfere  in  the  domestic  concerns  of  a  State,  has 
treated  the  subject  as  political  in  its  nature,  and  placed  the  power 
in  the  hands  of  that  department. 

The  fourth  section  of  the  fourth  article  of  the  Constitution  of 
the  United  States  provides  that  the  United  States  shall  guarantee 
to  every  State  in  the  Union  a  republican  form  of  government,  and 
shall  protect  each  of  them  against  invasion;  and  on  the  application 
of  the  legislature  or  of  the  Executive  (when  the  legislature  cannoi 
be  convened)  against  domestic  violence. 

Under  this  article  of  the  Constitution  it  rests  with  Congress  to 
decide  what  government  is  the  established  one  in  a  State.  For,  as 
the  United  States  guarantee  to  each  State  a  republican  government, 
Congress  must  necessarily  decide  what  government  is  established  in 
the  State  before  it  can  determine  whether  it  is  republican  or  not. 
And  when  the  senators  and  representatives  of  a  State  are  admitted 
into  the  councils  of  the  Union,  the  authority  of  the  government 
under  which  they  are  appointed,  as  well  as  its  republican  character, 
is  recognized  by  the  proper  constitutional  authority.  And  its  de- 
cision is  binding  on  every  other  department  of  the  government,  and 
could  not  be  questioned  in  a  judicial  tribunal.  It  is  true  that  the 
contest  in  this  case  did  not  last  long  enough  to  bring  the  matter  to 
this  issue ;  and  as  no  senators  or  representatives  were  elected  under 
the  authority  of  the  government  of  which  Mr.  Dorr  was  the  head, 
Congress  was  not  called  upon  to  decide  the  controversy.  Yet  the 
right  to  decide  is  placed  there,  and  not  in  the  courts.  *  *  *  * 

As  the  issues  presented,  in  their  very  essence   are   and  have  long 


3o6  SELECTED  CASZS  IN  CONSTITUTIONAL  LAW. 

since  by  this  court  been  definitely  determined  to  be  political  and 
governmental,  and  embraced  within  the  scope  of  the  powers  con- 
ferred upon  Congress,  and  not,  therefore,  within  the  reach  of  ju- 
dicial power,  it  follows  that  the  case  presented  is  not  within  our 
jurisdiction,  and  the  writ  of  error  must  therefore  be,  and  it  is,  dis- 
missed for  want  of  jurisdiction. 

Dismissed  for  want  of  jurisdiction. 

Note. — The  provisions  in  the  Constitution  of  Oregon  for  the  initiative,  the 
referendum  and  the  recall  are  given  in  the  appendix. 

Note. — The  case  of  Kiernan  vs.  City  of  Portland  was  decided  by  the 
Supreme  Court  at  the  same  time  with  the  Pacific  States  Telephone  and 
Telegraph  Company  vs.  Oregon  case.  The  Constitution  of  Oregon  reserved 
to  the  voters  of  a  municipality  the  powers  of  the  initiative  and  referendum 
as  to  all  local,  special  and  municipal  legislation.  The  people  of  the  city  of 
Portland  by  initiative  petition  requested  the  city  to  build  a  bridge  across  the 
Willamette  River  at  Broadway  street  within  the  said  city.  An  amendment 
to  the  city  charter  providing  for  the  construction  of  the  bridge  and  for  issu- 
ing bonds  in  a  sum  not  to  exceed  $2,000,000  to  pay  for  the  same  was 
adopted  by  popular  vote.  Kiernan,  a  taxpayer  of  the  city,  brought  suit  to 
restrain  the  sale  of  the  bonds,  upon  the  ground  that  the  initiative  proceedings 
were  unconstitutional,  as  the  State  government  has  ceased  to  be  republican 
in  form  since  the  adoption  of  the  initiative  and  referendum.  The  Court 
held  that  the  matter  was  not  a  judicial  question,  but  a  political  one,  solely  for 
Congress  to  determine. 


Section  7. 
OTHER  GUARANTEES. 

See  cases  grouped  under  Chapter  II,  Section  VII,  Restrictions 
on  the  Powers  of  Congress. 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  307 


CHAPTER  V. 

State    Comity 

Section  1. 

FULL  FAITH  AND  CREDIT  SHALL  BE  GIVEN  TO  THE  ACTS, 
RECORDS  AND  JUDGMENTS  OF  ANOTHER  STATE. 

HANLEY  v.  DONOGHUE. 
116  U.  S,  1.    1885. 

Michael  Hanley  and  William  F.  Welch  recovered  a  judgment  in 
the  State  of  Pennsylvania  against  two  joint  defendants,  Charles 
Donoghue,  who  had  been  duly  summoned  to  appear  before  the  court, 
and  John  Donoghue,  who  had  not  been  duly  summoned.  This  judg- 
ment was  valid  and  enforceable  under  the  laws  of  Pennsylvania. 
Hanley  and  Welch  sued  Charles  Donoghue  on  this  judgment  in 
Maryland,  but  the  lower  court  refused  to  consider  the  judgment  as 
binding  upon  it  and  gave  judgment  for  Donoghue.  This  decision  was 
affirmed  by  the  highest  court  of  the  State.  Hanley  and  Welch  then 
appealed  the  case  to  the  United  States  Supreme  Court  on  the  ground 
that  they  were  denied  a  right  and  privilege  to  which  they  are  entitled 
under  Art.  IV,  Sec.  1.  of  the  Constitution  of  the  United  States, 
which  declares  that  "full  faith  and  credit  shall  be  given  in  each  State 
to  the  public  acts,  records  and  judicial  proceedings  of  every  other 
State;  and  the  Congress  may  by  general  laws  prescribe  the  man- 
ner in  which  such  acts,  records  and  proceedings  shall  be  proved  and 
the  effect  thereof." 

By  the  settled  construction  of  these  provisions  of  the  Constitution 
and  statutes  of  the  United  States,  a  judgment  of  a  State  court,  in  a 
cause  within  its  jurisdiction,  and  against  a  defendant  lawfully  sum- 
moned, or  against  lawfully  attached  property  of  an  absent  defendant, 
is  entitled  to  as  much  force  and  effect  against  the  person  summoned 
or  the  property  attached,  when  the  question  is  presented  for  decision 
in  a  court  of  another  State,  as  it  has  in  the  State  in  which  it  was 
rendered.  And  it  is  within  the  power  of  the  legislature  of  a  State 
to  enact  that  judgments  which  shall  be  rendered  in  its  courts  in  ac- 
tions against  joint  defendants,  one  of  whom  has  not  been  duly  served 
with  process,  shall  be  valid  as  to  those  who  have  been  so  served, 
or  who  have  appeared  in  the  action.  *  *  *  * 


308  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

No  court  is  to  be  charged  with  the  knowledge  of  foreign  laws; 
but  they  are  well  understood  to  be  facts,  which  must,  like  other  facts, 
be  proved  before  they  can  be  received  in  a  court  of  justice.  It  is 
equally  well  settled  that  the  several  States  of  the  Union  are  to  be 
considered  as  in  this  respect  foreign  to  each  other,  and  that  the 
courts  of  one  State  are  not  presumed  to  know,  and  therefore  not 
bound  to  take  judicial  notice  of,  the  laws  of  another  State.  *  *  *  * 

Judgments  recovered  in  one  State  of  the  Union,  when  proved  in 
the  courts  of  another,  differ  from  judgments  recovered  in  a  foreign 
country  in  no  other  respect  than  that  of  not  being  re-examinable 
upon  the  merits,  nor  impeachable  for  fraud  in  obtaining  them,  if 
rendered  by  a  court  having  jurisdiction  of  the  cause  of  the  parties. 

Congress,  in  the  execution  of  the  power  conferred  upon  it  by  the 
Constitution,  having  prescribed  the  mode  of  attestation  of  records  of 
the  courts  of  one  State  to  entitle  them  to  be  proved  in  the  courts  of 
another  State,  and  having  enacted  that  records  so  authenticated  shall 
have  such  faith  and  credit  in  every  court  within  the  United  States 
as  they  have  by  law  or  usage  in  the  State  from  which  they  are  taken, 
a  record  of  a  judgment  so  authenticated  doubtless  proves  itself  with- 
out further  evidence ;  and  if  it  appears  upon  its  face  to  be  a  record 
of  a  court  of  general  jurisdiction,  the  jurisdiction  of  the  court  over 
the  cause  and  the  parties  is  to  be  presumed  unless  disproved  by  ex- 
trinsic evidence  or  by  the  record  itself.  Knowles  v.  Gaslight  &  Coke 
Co.,  19  Wall.  58.  But  Congress  has  not  undertaken  to  prescribe  in 
what  manner  the  effect  that  such  judgments  have  in  the  courts  of  the 
State  in  which  they  are  rendered  shall  be  ascertained,  and  has  left 
that  to  be  regulated  by  the  general  rules  of  pleading  and  evidence 
applicable  to  the  subject. 

Upon  principle,  therefore,  and  according  to  the  great  preponder- 
ance of  authority,  whenever  it  becomes  necessary  for  a  court  of  one 
State,  in  order  to  give  full  faith  and  credit  to  a  judgment  rendered 
in  another  State,  to  ascertain  the  effect  which  it  has  in  that  State, 
the  law  of  that  State  must  be  proved,  like  any  other  matter  of 
fact.  *  *  *  * 

When  exercising  an  original  jurisdiction  under  the  Constitution 
and  laws  of  the  United  States,  this  court,  as  well  as  every  other 
court  of  the  national  government,  doubtless  takes  notice,  without 
proof,  of  the  laws  of  each  of  the  United  States. 

But  in  this  court,  exercising  an  appellate  jurisdiction,  whatever 
was  matter  of  law  in  the  court  appealed  from  is  matter  of  law  here, 
and  whatever  was  matter  of  fact  in  the  court  appealed  from  is  mat- 
ter of  fact  here. 

In  the  exercise  of  its  general  appellate  jurisdiction  from  a  lower 
court  of  the  United  States,  this  court  takes  judicial  notice  of  the 
laws  of  every  State  of  the  Union,  because  those  laws  are  known  to 
the  court  below  as  laws  alone,  needing  no  averment  or  proof. 

But  on  a  writ  of  error  to  the  highest  court  of  a  State,  in  which  the 
revisory  power  of  this  court  is  limited  to  determining  whether  a 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  309 

question  of  law  depending  upon  the  Constitution,  laws,  or  treaties  of 
the  United  States  has  been  erroneously  decided  by  the  State  court 
upon  the  facts  before  it, — while  the  law  of  that  State,  being  known 
to  its  court  as  law,  is  of  course  within  the  judicial  notice  of  this 
court  at  the  hearing  on  error, — yet,  as  in  the  State  court  the  laws  of 
another  State  are  but  facts,  requiring  to  be  proved  in  order  to  be 
considered,  this  court  does  not  take  judicial  notice  of  them,  unless 
made  part  of  the  record  sent  up,  as  in  Green  v.  Van  Buskirk,  7  Wall. 
139.  The  case  comes,  in  principle,  within  the  rule  laid  down  long 
ago  by  Chief  Justice  Marshall :  "That  the  laws  of  a  foreign  nation, 
designed  only  for  the  direction  of  its  own  affairs,  are  not  to  be  no- 
ticed by  the  courts  of  other  countries,  unless  proved  as  facts,  and 
that  this  court,  with  respect  to  fact,  is  limited  to  the  statement  made 
in  the  court  below,  cannot  be  questioned."  Talbot  v.  Seeman,  1 
Cranch,  1,  38. 

Where  by  the  local  law  of  a  State  (as  in  Tennessee,  Hobbs  v. 
Memphis  &  C.  R.  Co.,  9  Heisk.  873)  its  highest  court  takes  judi- 
cial notice  of  the  laws  of  other  States,  this  court  also,  on  writ  of 
error,  might  take  judicial  notice  of  them.  But  such  is  not  the  case 
in  Maryland,  where  the  Court  of  Appeals  has  not  only  affirmed  the 
general  rule  that  foreign  laws  are  facts,  which,  like  other  facts, 
must  be  proved  before  they  can  be  received  in  evidence  in  courts 
of  justice;  but  has  held  that  the  effect  which  a  judgment  rendered 
in  another  State  has  by  the  law  of  that  State  is  a  matter  of  fact,  not 
to  be  judicially  noticed  without  allegation  and  proof;  and  conse- 
quently that  an  allegation  of  the  effect  which  such  a  judgment  has 
by  law  in  that  State  is  admitted  by  demurrer. 

From  these  considerations  it  follows  that  the  averment,  in  the  third 
count  of  the  declaration,  that  by  the  law  of  Pennsylvania  the 
judgment  entered  in  that  State  against  Charles  Donoghue  and  John 
Donoghue  was  valid  and  enforceable  against  Charles,  who  had  been 
served  with  process  in  that  State,  and  void  against  John,  who  had 
not  been  so  served,  must  be  considered,  both  in  the  courts  of  Mary- 
land, and  in  this  court  on  writ  of  error  to  one  of  those  courts,  an 
allegation  of  fact,  admitted  by  the  demurrer. 

Upon  the  record  before  us,  therefore,  the  plaintiff  appears  to  be 
entitled,  under  the  Constitution  and  laws  of  the  United  States,  to 
judgment  on  this  count.  The  general  judgment  for  the  defendant 
is  erroneous,  and  the  right  of  both  parties  will  be  secured  by  or- 
dering, in  the  usual  form,  that  the 

Judgment  of  the  Court  of  Appeals  of  Maryland  be  reversed, 
and  the  case  remanded  to  that  court  for  further  proceedings 
not  inconsistent  with  this  opinion. 


3io  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

Section  2. 
PRIVILEGES  AND  IMMUNITIES  OF  CITIZENS. 

CORFIELD  v.  CORYELL. 
4  WASH.  C.  C,  371.     1823. 

In  1820  the  State  of  New  Jersey  passed  an  act  regulating  the  busi- 
ness of  dredging  for  oysters.  This  act  excluded  the  inhabitants  and 
residents  of  other  States  from  the  privilege  of  taking  or  gathering 
oysters  in  any  of  the  rivers,  bays  and  waters  of  the  State.  One  of 
the  penalties  privided  by  the  statute  was  the  forfeiture  of  the  boat 
and  apparatus  used  by  any  non-resident  in  gathering  oysters  in  vio- 
lation of  the  statute. 

The  defendant,  one  of  the  constables  of  Cumberland  County,  ar- 
rested the  plaintiff,  a  non-resident  of  New  Jersey,  whom  he  found, 
gathering  oysters  in  Maurice  River  Cove,  and  seized  his  boat  and 
sold  it.  The  plaintiff  brought  an  action  of  trespass  for  the  taking  of 
his  property  in  the  United  States  Circuit  Court  for  the  Eastern 
District  of  Pennsylvania.  The  plaintiff  contended  that  the  New 
Jersey  Act  of  1820  infringes  that  section  of  the  Constitution  of  the 
United  States  which  declares  that  "the  citizens  of  each  State  shall 
be  entitled  to  all  the  privileges  and  immunities  of  citizens  in  the  sev- 
eral States." 

WASHINGTON,  CIRCUIT  JUSTICE,  delivered  the  opinion  of  the  court. 

The  inquiry  is,  what  are  the  privileges  and  immunities  of  citi- 
zens in  the  several  States  ?  We  feel  no  hesitation  in  confining  these 
expressions  to  those  privileges  and  immunities  which  are,  in  their 
nature,  fundamental;  which  belong,  of  right,  to  the  citizens  of  all 
free  governments,  and  which  have,  at  all  times,  been  enjoyed  by  the 
citizens  of  the  several  States  which  compose  this  Union  from  the 
time  of  their  becoming  free,  independent,  and  sovereign.  What 
these  fundamental  principles  are,  it  would  perhaps  be  more  tedious 
than  difBcult  to  enumerate.  They  may,  however,  be  comprehended 
under  the  following  general  heads ;  Protection  by  the  government ; 
the  enjoyment  of  life  and  liberty,  with  the  right  to  acquire  and  pos- 
sess property  of  every  kind,  and  to  pursue  and  obtain  happiness  and 
safety ;  subject  nevertheless  to  such  restraints  as  the  government  may 
justly  prescribe  for  the  general  good  of  the  whole.  The  right  of  a 
citizen  of  one  State  to  pass  through  or  to  reside  in  any  other  State 
for  the  purposes  of  trade,  agriculture,  professional  pursuits  or  other- 
wise ;  to  claim  the  benefit  of  the  writ  of  habeas  corpus;  to  institute 
and  maintain  actions  of  any  kind  in  the  courts  of  the  State ;  to  take, 
hold,  and  dispose  of  property,  either  real  or  personal ;  and  an  exemp- 
tion from  higher  taxes  or  impositions  than  are  paid  by  the  other  cit- 
izens of  the  State,  may  be  mentioned  as  some  of  the  particular  priv- 
ileges and  immunities  of  citizens,  which  are  clearly  embraced  by  the 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  311 

general  description  of  privileges  deemed  to  be  fundamental;  to 
which  may  be  added,  the  elective  franchise,  as  regulated  and  estab- 
lished by  the  laws  or  constitution  of  the  State  in  which  it  is  to  be 
exercised.  These,  and  many  others  which  might  be  mentioned,  are 
strictly  speaking,  privileges  and  immunities,  and  the  enjoyment  of 
them  by  the  citizens  of  each  State  in  every  other  State  was  mani- 
festly calculated  (to  use  the  expression  of  the  preamble  to  the  cor- 
responding provision  in  the  old  Articles  of  Confederation)  "the 
better  to  secure  and  perpetuate  mutual  friendship  and  intercourse 
among  the  people  of  the  different  States  of  the  Union."  But  we 
cannot  accede  to  the  proposition  which  was  insisted  on  by  the  coun- 
sel, that,  under  this  provision  of  the  Constitution,  the  citizens  of  the 
several  States  are  premitted  to  participate  in  all  the  rights  which 
belong  exclusively  to  the  citizens  of  any  other  particular  State,  mere- 
ly upon  the  ground  that  they  are  enjoyed  by  those  citizens;  much 
less,  that  in  regulating  the  use  of  the  common  property  of  the  citi- 
zens of  such  State,  the  legislature  is  bound  to  extend  to  the  citizens 
of  all  the  other  States  the  same  advantages  as  are  secured  to  their 
own  citizens.  A  several  fishery,  either  as  the  right  to  its  respects 
running  fish,  or  such  as  are  stationary,  such  as  oysters,  clams  and 
the  like,  is  as  much  the  property  of  the  individual  to  whom  it  be- 
longs as  dry  land  or  land  covered  by  water ;  and  is  equally  protected 
by  the  laws  of  the  State  against  the  aggressions  of  others ;  whether 
citizens  or  strangers.  Where  those  private  rights  do  not  exist  to 
the  exclusion  of  the  common  right,  that  of  fishing  belongs  to  all  the 
citizens  or  subjects  of  the  State.  It  is  the  property  of  all;  to  be 
enjoyed  by  them  in  subordination  to  the  laws  which  regulate  its  use. 
They  may  be  considered  tenants  in  common  of  this  property;  and 
they  are  so  exclusively  entitled  to  the  use  of  it,  that  it  cannot  be 
'enjoyed  by  others  without  the  tacit  consent  or  the  express  permis- 
sion of  the  sovereign  who  has  the  power  to  regulate  its  use.  *  *  *  * 
The  oyster  beds  belonging  to  a  State  may  be  abundantly  sufficient 
for  the  use  of  the  citizens  of  that  State,  but  might  be  totally  ex- 
hausted and  destroyed  if  the  legislature  could  not  so  regulate  the 
use  of  them  as  to  exclude  the  citizens  of  the  other  States  from 
taking  them,  except  under  such  limitations  and  restrictions  as  the 
laws  may  prescribe."  Judgment  entered  for  defendant. 


Section  3. 
EXTRADITION  BETWEEN  STATES. 

KENTUCKY  v.  DENNISON. 
24  HOWARD,  66.     1860. 

Willis  Lago,  a  free  negro  resident  of  Kentucky,  assisted  a  slave  to 
escape  and  then  he,  himself,  fled  to  Ohio.    Lago's  act  being  a  crime 


312  SELECTED  CASES  IN  CONSTITUTIONAL  LAW. 

under  the  laws  of  Kentucky,  the  Governor  of  Kentucky  demanded 
him  as  a  fugitive  from  justice  to  be  delivered  up  by  the  Governor  of 
Ohio.  The  demand  was  refused,  whereupon  Kentucky  brought  suit 
in  the  United  States  Supreme  Court  asking  for  a  mandamus  to  com- 
pel Dennison,  the  Governor  of  Ohio,  to  deliver  Lago  to  the  State  au- 
thorities. Kentucky  claimed  that  the  matter  in  dispute  was  covered 
by  Art.  IV,  Sec.  2,  of  the  Constitution  of  the  United  States,  which 
reads  thus:  "A  person  charged  in  any  State  with  treason,  felony, 
or  other  crime,  who  shall  flee  from  justice  and  be  found  in  another 
State,  shall  on  demand  of  the  Executive  authority  of  the  State  from 
which  he  fled,  be  delivered  up,  to  be  removed  to  the  State  having 
jurisdiction  of  the  crime."  To  execute  this  obligation  of  the  Con- 
stitution, the  Act  of  Congress  of  1793  was  passed,  which  provides: 
"It  shall  be  the  duty  of  the  executive  authority  of  the  State  or  Ter- 
ritory to  which  such  person  shall  have  fled,  to  cause  him  or  her 
to  be  arrested  and  secured,  and  notice  of  the  arrest  to  be  given  to 
the  executive  authority  making  such  demands,  or  to  the  agent  of 
such  authority  appointed  to  receive  the  fugitive  to  be  delivered  to 
such  agent  when  he  shall  appear." 

MR.  CHIEF  JUSTICE  TANEY  delivered  the  opinion  of  the  court. 

The  clause  (of  the  Constitution)  in  question.  .  .  .  authorizes  the 
demand  to  be  made  by  the  Executive  authority  of  the  state  where 
the  crime  was  committed,  but  does  not  in  so  many  words  specify  the 
officer  of  the  State  upon  whom  the  demand  is  to  be  made,  and  whose 
duty  it  is  to  have  the  fugitive  delivered  and  removed  to  the  State 
having  jurisdiction  of  the  crime.  *  *  *  * 

The  demand  being  thus  made,  the  Act  of  Congress  declares,  that, 
"it  shall  be  the  duty  of  the  Executive  authority  of  the  State,"  to 
cause  the  fugitive  to  be  arrested  and  secured  and  delivered  to  the 
agent  of  the  demanding  State.  The  words,  "it  shall  be  the  duty,"  in 
ordinary  legislation,  imply  the  assertion  of  the  power  to  command 
and  to  coerce  obedience.  But  looking  to  the  subject-matter  of  this 
law,  and  the  relations  which  the  United  States  and  the  several  States 
bear  to  each  other,  the  court  is  of  the  opinion,  the  words  "it  shall 
be  the  duty"  were  not  used  as  mandatory  and  compulsory,  but  as 
declaratory  of  the  moral  duty  which  this  compact  created,  when 
Congress  had  provided  the  mode  of  carrying  it  into  execution.  The 
act  does  not  provide  any  means  to  compel  the  execution  of  this  duty, 
nor  inflict  any  punishment  for  neglect  or  refusal  on  the  part  of  the 
Executive  of  the  State;  nor  is  there  any  clause  or  provision  in  the 
Constitution  which  arms  the  government  of  the  United  States  with 
this  power.  Indeed,  such  a  power  would  place  every  State  under 
the  control  and  dominion  of  the  General  Government,  even  in  the 
administration  of  its  internal  concerns  and  reserved  rights.  And  we 
think  it  clear,  that  the  Federal  Government,  under  the  Constitution, 
has  no  power  to  impose  on  a  State  officer,  as  such,  any  duty  what- 
ever, and  compel  him  to  perform  it;  for  if  it  possessed  this  power 
it  might  overload  the  officer  with  duties  which  would  fill  up  all  his 


SELECTED  CASES  IN  CONSTITUTIONAL  LAW.  313 

time,  and  disable  him  from  performing  his  obligations  to  the  State, 
and  might  impose  upon  him  duties  of  a  character  incompatible  with 
the  rank  and  dignity  to  which  he  was  elevated  by  the  State. 

It  is  true  that  Congress  may  authorize  a  particular  State  officer 
to  perform  a  particular  duty ;  but  if  he  declines  to  do  so,  it  does  not 
follow  that  he  may  be  coerced  or  punished  for  his  refusal.  And 
we  are  far  from  supposing,  that  in  using  the  word  "duty,"  the  states- 
men who  framed  and  passed  the  law,  or  the  President  who  approved 
and  signed  it,  intended  to  exercise  a  coercive  power  over  State  offi- 
cers not  warranted  by  the  Constitution. 

The  motion  for  the  mandamus  must  be  overruled. 


3 1 4  FEDERAL   AND   STATE   STATUTES. 


Appendix 


FEDERAL  AND  STATE  STATUTES 


Note. — The  important  sections  only  of  the  particular  statutes  have  been 
given. 

THE  SHERMAN  ANTI-TRUST  LAW. 

Act  of  July  2,  1890. 

AN   ACT  to   protect   trade   and   commerce   against   unlawful    restraints    and 
monopolies. 

SECTION  1.  Every  contract,  combination  in  the  form  of  trust  or  otherwise, 
or  conspiracy,  in  restraint  of  trade  or  commerce  among  the  several  States, 
or  with  foreign  nations,  is  hereby  declared  to  be  illegal.  Every  person  who 
shall  make  any  such  contract  or  engage  in  any  such  combination  or  con- 
spiracy, shall  be  deemed  guilty  of  a  misdemeanor,  and,  on  conviction  thereof, 
shall  be  punished  by  fine  not  exceeding  five  thousand  dollars,  or  by  im- 
prisonment not  exceeding  one  year,  or  by  both  said  punishments,  in  the 
discretion  of  the  court. 

SEC.  2.  Every  person  who  shall  monopolize,  or  attempt  to  monopolize,  or 
combine  or  conspire  with  any  other  person  or  persons,  to  monopolize  any 
part  of  the  trade  or  commerce  among  the  several  States,  or  with  foreign 
nations,  shall  be  deemed  guilty  of  a  misdemeanor,  and,  on  conviction  thereof, 
shall  be  punished  by  fine  not  exceeding  five  thousand  dollars,  or  by  im- 
prisonment not  exceeding  one  year,  or  by  both  said  punishments,  in  the 
discretion  of  the  court. 

SEC.  3.  Every  contract,  combination  in  form  of  trust  or  otherwise,  or 
conspiracy,  in  restraint  of  trade  or  commerce  in  any  Territory  of  the  United 
States  or  of  the  District  of  Columbia,  or  in  restraint  of  trade  or  commerce 
between  any  such  Territory  and  another,  or  between  any  such  Territory  or 
Territories  and  any  State  or  States  or  the  District  of  Columbia,  or  with 
foreign  nations,  or  between  the  District  of  Columbia  and  any  State  or  States 
or  foreign  nations,  is  hereby  declared  illegal.  Every  person  who  shall  make 
any  such  contract  or  engage  in  any  such  combination  or  conspiracy,  shall 


FEDERAL  AND  STATE  STATUTES.         315 

be  deemed  guilty  of  a  misdemeanor,  and,  on  conviction  thereof,  shall  be 
punished  by  fine  not  exceeding  five  thousand  dollars,  or  by  imprisonment  not 
exceeding  one  year,  or  by  both  said  punishments,  in  the  discretion  of  the 
court. 

SEC.  7.  Any  person  who  shall  be  injured  in  his  business  or  property  by 
any  other  person  or  corporation  by  reason  of  anything  forbidden  or  declared 
to  be  unlawful  by  this  act,  may  sue  therefor  in  any  circuit  court  of  the 
United  States  in  the  district  in  which  the  defendant  resides  or  is  found, 
without  respect  to  the  amount  in  controversy,  and  shall  recover  threefold 
the  damages  by  him  sustained,  and  the  costs  of  suit,  including  a  reasonable 
attorney's  fee. 

SEC.  8.  That  the  word  "person,"  or  "persons,"  wherever  used  in  this  act 
shall  be  deemed  to  include  corporations  and  associations  existing  under  or 
authorized  by  the  laws  of  either  the  United  States,  or  the  laws  of  any  of 
the  Territories,  the  laws  of  any  State,  of  the  laws  of  any  foreign  country. 


THE  FEDERAL  TRADE  COMMISSION  ACT. 

Approved  and  effective  September  26th,  1914. 

Note. — Important  parts  of  sections  only  are  set  forth. 

MEMBERSHIP  IN  COMMISSION. 

SECTION  1.  That  a  commission  is  hereby  created  and  established,  to  be 
known  as  the  Federal  Trade  Commission  (hereinafter  referred  to  as  the 
commission),  which  shall  be  composed  of  five  commissioners,  who  shall  be 
appointed  by  the  President,  by  and  with  the  advice  and  consent  of  the  Senate. 
Not  more  than  three  of  the  commissioners  shall  be  members  of  the  same 
political  party.  The  first  commissioners  appointed  shall  continue  in  office 
for  terms  of  three,  four,  five,  six,  and  seven  years,  respectively,  from  the 
date  of  the  taking  effect  of  this  Act,  the  term  of  each  to  be  designated  by 
the  President,  but  their  successors  shall  be  appointed  for  terms  of  seven 
years,  except  that  any  person  chosen  to  fill  a  vacancy  shall  be  appointed  only 
for  the  unexpired  term  of  the  commissioner  whom  he  shall  succeed.  The 
commission  shall  choose  a  chairman  from  its  own  membership.  No  commis- 
sioner shall  engage  in  any  other  business,  vocation,  or  employment.  Any 
commissioner  may  be  removed  by  the  President  for  inefficiency,  neglect  of 
duty,  or  malfeasance  in  office.  A  vacancy  in  the  commission  shall  not  impair 
the  right  of  the  remaining  commissioners  to  exercise  all  the  powers  of  the 
commission. 

SALARY  OF  COMMISSIONERS. 

SEC.  2.  That  each  commissioner  shall  receive  a  salary  of  $10,000  a  year, 
payable  in  the  same  manner  as  the  salaries  of  the  judges  of  the  courts  of  the 
United  States. 


3i6  FEDERAL   AND    STATE   STATUTES. 

BUREAU  OF  CORPORATIONS  ABOLISHED. 

SEC.  3.  That  upon  the  organization  of  the  commission  and  election  of  its 
chairman,  the  Bureau  of  Corporations  and  the  offices  of  Commissioner  and 
Deputy  Commissioner  of  Corporations  shall  cease  to  exist;  and  all  pending 
investigations  and  proceedings  of  the  Bureau  of  Corporations  shall  be  con- 
tinued by  the  commission. 

The  principal  office  of  the  commission  shall  be  in  the  city  of  Washington, 
but  it  may  meet  and  exercise  all  its  powers  at  any  other  place.  The  com- 
mission may,  by  one  or  more  of  its  members,  or  by  such  examiners  as  it 
may  designate,  prosecute  any  inquiry  necessary  to  its  duties  in  any  part  of 
the  United  States. 

MEANING  OF  TERMS  USED. 

SEC.  4.  Defines  the  meaning  of  the  terms,  Commerce,  Corporation,  Anti- 
Trust  Act,  Documentary  Evidence. 

PROCEDURE  ESTABLISHED  AND  EFFECT  OF  DECREES. 

SEC.  5.  That  unfair  methods  of  competition  in  commerce  are  hereby  de- 
clared unlawful. 

The  commission  is  hereby  empowered  and  directed  to  prevent  persons, 
partnerships,  or  corporations,  except  banks,  and  common  carriers  subject  to 
the  Acts  to  regulate  commerce,  from  using  unfair  methods  of  competition  in 
commerce. 

Whenever  the  commission  shall  have  reason  to  believe  that  any  such  person, 
partnership,  or  corporation  has  been  or  is  using  any  unfair  method  of  com- 
petition in  commerce,  and  if  it  shall  appear  to  the  commission  that  a  proceed- 
ing by  it  in  respect  thereof  would  be  to  the  interest  of  the  public,  it  shall 
issue  and  serve  upon  such  person,  partnership,  or  corporation  a  complaint^ 
stating  its  charges  in  that  respect,  and  containing  a  notice  of  a  hearing  upon 
a  day  and  at  a  place  therein  fixed  at  least  thirty  days  after  the  service  of  said 
complaint.  The  person,  partnership,  or  corporation  so  complained  of  shall 
have  the  right  to  appear  at  the  place  and  time  so  fixed  and  show  cause  why 
an  order  should  not  be  entered  by  the  commission  requiring  such  person, 
partnership,  or  corporation  to  cease  and  desist  from  the  violation  of  the  law 
so  charged  in  said  complaint.  Any  person,  partnership,  or  corporation  may 
make  application,  and  upon  good  cause  shown  may  be  allowed  by  the  com- 
mission, to  intervene  and  appear  in  said  proceeding  by  counsel  or  in  person. 
The  testimony  in  any  such  proceeding  shall  be  reduced  to  writing  and  filed 
in  the  office  of  the  commission.  //  upon  such  hearing  the  commission  shall 
be  of  the  opinion  that  the  method  of  competition  in  question  is  prohibited  by 
this  Act,  it  shall  make  a  report  in  writing  in  which  it  shall  state  its  findings 
as  to  the  facts,  and  shall  issue  and  cause  to  be  served  on  such  person,  partner- 
ship, or  corporation  an  order  requiring  such  person,  partnership,  or  corpora- 
tion to  cease  and  desist  from  using  such  method  of  competition.  Until  a 
transcript  of  the  record  in  such  hearing  shall  have  been  filed  in  a  circuit  court 
of  appeals  of  the  United  States,  as  hereinafter  provided,  the  commission  may 
at  any  time,  upon  such  notice  and  in  such  manner  as  it  shall  deem  proper, 
modify  or  set  aside,  in  whole  or  in  part,  any  report  or  any  order  made  or 
issued  by  it  under  this  section. 


FEDERAL  AND  STATE  STATUTES.         317 

If  such  person,  partnership,  or  corporation  fails  or  neglects  to  obey  such 
order  of  the  commission  while  the  same  is  in  effect,  the  commission  may  apply 
to  the  Circuit  Court  of  Appeals  of  the  United  States,  within  any  circuit 
where  the  method  of  competition  in  question  was  used  or  where  such  person, 
partnership,  or  corporation  resides  or  carries  on  business,  for  the  enforce- 
ment of  its  order,  and  shall  certify  and  file  with  its  application  a  transcript 
of  the  entire  record  in  the  proceeding,  including  all  the  testimony  taken  and 
the  report  and  order  of  the  commission.  Upon  such  filing  of  the  application 
and  transcript  the  court  shall  cause  notice  thereof  to  be  served  upon  such 
person,  partnership,  or  corporation  and  thereupon  shall  have  jurisdiction  of 
the  proceeding  and  of  the  question  determined  therein,  and  shall  have  power 
to  make  and  enter  upon  the  pleadings,  testimony,  and  proceedings  set  forth 
in  such  transcript  a  decree  affirming,  modifying,  or  setting  aside  the  order  of 
the  commission.  The  findings  of  the  commission  as  to  the  facts,  if  supported 
by  testimony,  shall  be  conclusive.  *  *  *  *  The  judgment  and  decree  of 
the  court  shall  be  final,  except  that  the  same  shall  be  subject  to  review  by  the 
Supreme  Court  upon  certiorari  as  provided  in  section  two  hundred  and  forty 
of  the  Judical  Code. 


POWERS  OF  THE  COMMISSION. 
SEC.  6.     That  the  commission  shall  also  have  power — 

(a)  To  gather   and  compile  information   concerning, .  and  to  investigate 
from  time  to  time  the  organization,  business,  conduct,  practices,  and  man- 
agement of  any  corporation  engaged  in  commerce,  excepting  banks  and  com- 
mon carriers  subject  to  the  Act  to  regulate  commerce,  and  its  relation  to  other 
corporations  and  to  individuals,  associations,  and  partnerships. 

(b)  To   require,  by  general   or   special   orders,   corporations   engaged   in 
commerce,  or  any  class  of  them,  or  any  of  them,  respectively,  to  file  with  the 
commission  in  such  form  as  the  commission  may  prescribe  annual  or  special, 
or  both  annual  and  special,  reports  or  answers  in  writing  to  specific  questions, 
furnishing  to  the  commission  such  information  as  it  may  require  as  to  the 
organization,  business,  conduct,  practices,  management,  and  relation  to  other 
corporations,  partnerships,  and  individuals  of  the  respective  corporations  filing 
such  reports  or  answers  in  writing.     Such  reports  and  answers  shall  be  made 
under  oath,  or   otherwise,   as  the  commission  may  prescribe,   and  shall  be 
filed  with  the  commission  within  such  reasonable  period  as  the  commission 
may  prescribe,  unless  additional  time  be  granted  in  any  case  by  the  com- 
mission. 

(c)  Whenever   a   final   decree  has   been   entered    against    any   defendant 
corporation  in  any  suit  brought  by  the  United  States  to  prevent  and  restrain 
any  violation   of  the  anti-trust  Acts,  to  make  investigation,   upon   its  own 
initiative,  of  the  manner  in  which  the  decree  has  been  or  is  being  carried  out, 
and  upon  the  application  of  the  Attorney  General  it  shall  be  its  duty  to  make 
such  investigation.     It  shall  transmit  to  the  Attorney  General  a  report  em- 
bodying its  findings  and  recommendations  as  a  result  of  any  such  investiga- 
tion, and  the  report  shall  be  made  public  in  the  discretion  of  the  commission. 

(d)  Upon  the  direction  of  the  President  or  either  House  of  Congress  to 


318  FEDERAL   AND   STATE   STATUTES. 

investigate  and  report  the  facts  relating  to  any  alleged  violations  of  the  anti- 
trust Acts  by  any  corporation. 

(e)  Upon   the   application   of   the   Attorney   General   to   investigate   and 
make  recommendations  for  the  readjustment  of  the  business  of  any  corpora- 
tion alleged  to  be  violating  the  anti-trust  Acts  in  order  that  the  corporation 
may  thereafter  maintain  its  organization,  management,  and  conduct  of  busi- 
ness in  accordance  with  law. 

(f)  To  make  public  from  time  to  time  such  portions  of  the  information 
obtained  by  it  hereunder,  except  trade  secrets  and  names  of  customers,  as  it 
shall  deem  expedient  in  the  public  interest;  and  to  make  annual  and  special 
reports  to  the  Congress  and  to  submit  therewith  recommendations  for  addi- 
tional  legislation;    and   to   provide    for   the  publication   of    its    reports    and 
decisions  in  such  form  and  manner  as  may  be  best  adapted  for  public  in- 
formation and  use. 

(g)  From  time  to  time  to  classify  corporations  and  to  make  rules  and 
regulations  for  the  purpose  of  carrying  out  the  provisions  of  this  Act. 

(h)  To  investigate,  from  time  to  time,  trade  conditions  in  and  with 
foreign  countries  where  associations,  combinations,  or  practices  of  manu- 
facturers, merchants,  or  traders,  or  other  conditions,  may  affect  the  foreign 
trade  of  the  United  States,  and  to  report  to  Congress  thereon,  with  such 
recommendations  as  it  deems  advisable. 

REFERENCE  OF   EQUITY   SUITS   TO   COMMISSION. 

SEC.  7.  Provides  that  the  Courts  may  refer  equity  suits  brought  by  or  under 
direction  of  Attorney  General  under  the  anti-trust  Acts  to  the  commission 
for  findings  and  decree. 

RIGHT  TO   PAPERS,  RECORDS,   ETC.,   OF  GOVERNMENT. 

SEC.  8.  Provides  that  departments  and  bureaus  of  the  Government  shall 
furnish  the  commission  with  all  records,  papers,  and  information  relating  to 
any  corporation,  subject  to  the  provisions  of  the  Act. 

RIGHT  TO  PAPERS,  RECORDS,  ETC,  OF  CORPORATIONS  AND  TO 
COMPEL  ATTENDANCE  OF  WITNESSES. 

SEC.  9.  That  for  the  purposes  of  this  Act  the  commission,  or  its  duly 
authorized  agent  or  agents,  shall  at  all  reasonable  times  have  access  to,  for 
the  purpose  of  examination,  and  the  right  to  copy  any  documentary  evidence 
of  any  corporation  being  investigated  or  proceeded  against;  and  the  com- 
mission shall  have  power  to  require  by  subpoena  the  attendance  and  testimony 
of  witnesses  and  the  production  of  all  such  documentary  evidence  relating 
to  any  matter  under  investigation. 

Such  attendance  of  witnesses,  and  the  production  of  such  documentary 
evidence,  may  be  required  from  any  place  in  the  United  States,  at  any  desig- 
nated place  of  hearing.  And  in  case  of  disobedience  to  a  subpoena  the  com- 
mission may  invoke  the  aid  of  any  court  of  the  United  States  in  requiring 
the  attendance  and  testimony  of  witnesses  and  the  production  of  documentary 
evidence. 


FEDERAL   AND   STATE   STATUTES.  319 

Upon  the  application  of  the  Attorney  General  of  the  United  States,  at  the 
request  of  the  commission,  the  district  courts  of  the  United  States  shall  have 
jurisdiction  to  issue  writs  of  mandamus  commanding  any  person  or  corpora- 
tion to  comply  with  the  provisions  of  this  Act  or  any  order  of  the  commis- 
sion made  in  pursuance  thereof. 

No  person  shall  be  excused  from  attending  and  testifying  or  from  produc- 
ing documentary  evidence  before  the  commission  or  in  obedience  to  the 
subpoena  of  the  commission  on  the  ground  or  for  the  reason  that  the  testimony 
or  evidence,  documentary  or  otherwise,  required  of  him  may  tend  to  criminate 
him  or  subject  him  to  a  penalty  or  forfeiture.  But  no  natural  person  shall 
be  prosecuted  or  subjected  to  any  penalty  or  forfeiture  for  or  on  account 
of  any  transaction,  matter,  or  thing  concerning  which  he  may  testify,  or 
produce  evidence,  documentary  or  otherwise,  before  the  commission  in  obedi- 
ence to  a  subpoena  issued  by  it :  Provided,  That  no  natural  person  so  testi- 
fying shall  be  exempt  from  prosecution  and  punishment  for  perjury  com- 
mitted in  so  testifying. 

PENALTIES  FOR  VIOLATIONS  OF  ORDERS  OR  REQUIREMENTS. 

SEC.  10.  Provides  the  penalties  for  violations  of  the  orders,  decrees  or 
requirements  of  the  commission. 

ACT  DOES  NOT  REPEAL  ANTI-TRUST  OR  COMMERCE  ACTS. 

SEC.  11.  Nothing  contained  in  this  Act  shall  be  construed  to  prevent  or 
interfere  with  the  enforcement  of  the  provisions  of  the  anti-trust  Acts  or 
the  Acts  to  regulate  commerce,  nor  shall  anything  contained  in  the  Act  be 
construed  to  alter,  modify,  or  repeal  the  said  anti-trust  Acts  or  the  Acts  to 
regulate  commerce  or  any  part  or  parts  thereof. 


THE  CLAYTON  ANTI-TRUST  LAW. 

Approved  October  15th,  1914. 

Note. — Important  parts  of  sections  only  are  set  forth. 

DEFINITION  OF  TERMS. 
SECTION  1.    Defines  the  terms  Anti-Trust  Laws,  Commerce  and  Persons. 

PRICE   DISCRIMINATION. 

SEC.  2.  That  it  shall  be  unlawful  for  any  person  engaged  in  commerce, 
in  the  course  of  such  commerce,  either  directly  or  indirectly  to  discriminate 
in  price  between  different  purchasers  of  commodities,  which  commodities 
are  sold  for  use,  consumption,  or  resale  within  the  United  States  or  any 
Territory  thereof  or  the  District  of  Columbia  or  any  insular  possession  or 
other  place  under  the  jurisdiction  of  the  United  States,  where  the  effect  of 
such  discrimination  may  be  to  substantially  lessen  competition  or  tend  to 
create  a  monopoly  in  any  line  of  commerce:  Provided,  That  nothing  herein 


320          FEDERAL  AND  STATE  STATUTES. 

contained  shall  prevent  discrimination  in  price  between  purchasers  of  com- 
modities on  account  of  difference  in  the  grade,  quality,  or  quantity  of  the 
commodity  sold,  or  that  makes  only  due  allowance  for  difference  in  the  cost 
of  selling  or  transportation,  or  discrimination  in  price  in  the  same  or  different 
communities  made  in  good  faith  to  meet  competition :  And  provided  further, 
That  nothing  herein  contained  shall  prevent  persons  engaged  in  selling  goods, 
wares,  or  merchandise  in  commerce  from  selecting  their  own  customers  in 
bona  fide  transactions  and  not  in  restraint  of  trade. 


EXCLUSIVE  AGREEMENTS. 

SEC.  3.  That  it  shall  be  unlawful  for  any  person  engaged  in  commerce, 
in  the  course  of  such  commerce,  to  lease  or  make  a  sale  or  contract  for  sale 
of  goods,  wares,  merchandise,  machinery,  supplies  or  other  commodities, 
whether  patented  or  unpatented,  for  use,  consumption  or  resale  within  the 
United  States  or  any  Territory  thereof  or  the  District  of  Columbia  or  any 
insular  possession  or  other  place  under  the  jurisdiction  of  the  United  States, 
or  fix  a  price  charged  therefor,  or  discount  from,  or  rebate  upon,  such  price, 
on  the  condition,  agreement  or  understanding  that  the  lessee  or  purchaser 
thereof  shall  not  use  or  deal  in  the  goods,  wares,  merchandise,  machinery, 
supplies  or  other  commodities  of  a  competitor  or  competitors  of  the  lessor 
or  seller,  where  the  effect  "of  such  lease,  sale,  or  contract  for  sale  or  such 
condition,  agreement  or  understanding  may  be  to  substantially  lessen  com- 
petition or  tend  to  create  a  monopoly  in  any  line  of  commerce. 


DIRECT  REMEDY  FOR  PERSON   INJURED  IN   BUSINESS. 

SEC.  4.  That  any  person  who  shall  be  injured  in  his  business  or  property 
by  reason  of  anything  forbidden  in  the  anti-trust  laws  may  sue  therefor  in 
any  district  court  of  the  United  States  in  the  district  in  which  the  defendant 
resides  or  is  found  or  has  an  agent,  without  respect  to  the  amount  in  con- 
troversy, and  shall  recover  threefold  the  damages  by  him  sustained,  and  the 
cost  of  suit,  including  a  reasonable  attorney's  fee. 

SEC.  5.  Provides  that  final  conviction  of  violation  of  anti-trust  laws 
in  a  suit  by  the  United  States  shall  be  prima  facie  evidence  against  the  same 
defendant  in  any  suit  brought  by  a  private  party  under  the  anti-trust  law. 


LAW  NOT  TO  APPLY  TO  LABOR  ORGANIZATIONS. 

SEC.  6.  That  the  labor  of  a  human  being  is  not  a  commodity  or  article 
of  commerce.  Nothing  contained  in  the  anti-trust  laws  shall  be  construed 
to  forbid  the  existence  and  operation  of  labor,  agricultural,  or  horticultural 
organizations,  instituted  for  the  purposes  of  mutual  help,  and  not  having 
capital  stock  or  conducted  for  profit,  or  to  forbid  or  restrain  individual 
members  of  such  organizations  from  lawfully  carrying  out  the  legitimate 
objects  thereof;  nor  shall  such  organizations,  or  the  members  thereof,  be 
held  or  construed  to  be  illegal  combinations  or  conspiracies  in  restraint  of 
trade,  under  the  anti-trust  laws. 


FEDERAL   AND   STATE   STATUTES.  321 

STOCK  CONTROL  OF  COMPETING  CORPORATIONS. 

SEC.  7.  That  no  corporation  engaged  in  commerce  shall  acquire,  directly 
or  indirectly,  the  whole  or  any  part  of  the  stock  or  other  share  capital  of 
another  corporation  engaged  also  in  commerce  where  the  effect  of  such 
acquisition  may  be  to  substantially  lessen  competition  between  the  corporation 
whose  stock  is  so  acquired  and  the  corporation  making  the  acquisition,  or  to 
restrain  such  commerce  in  any  section  or  community,  or  tend  to  create  a 
monopoly  of  any  line  of  commerce. 

No  corporation  shall  acquire,  directly  or  indirectly,  the  whole  or  any  part 
of  the  stock  or  other  share  capital  of  two  or  more  corporations  engaged  in 
commerce  where  the  effect  of  such  acquisition,  or  the  use  of  such  stock  by 
the  voting  or  granting  of  proxies  or  otherwise,  may  be  to  substantially  lessen 
competition  between  such  corporations,  or  any  of  them,  whose  stock  or  other 
share  capital  is  so  acquired,  or  to  restrain  such  commerce  in  any  section  or 
community,  or  tend  to  create  a  monopoly  of  any  line  of  commerce. 

This  section  shall  not  apply  to .  corporations  purchasing  such  stock  solely 
for  investment  and  not  using  the  same  by  voting  or  otherwise  to  bring  about, 
or  in  attempting  to  bring  about,  the  substantial  lessening  of  competition. 
Nor  shall  anything  contained  in  this  section  prevent  a  corporation  engaged  in 
commerce  from  causing  the  formation  of  subsidiary  corporations  for  the 
actual  carrying  on  of  their  immediate  lawful  business,  or  the  natural  and 
legitimate  branches  or  extensions  thereof,  or  from  owning  and  holding  all 
or  a  part  of  the  stock  of  such  subsidiary  corporations,  when  the  effect  of 
such  formation  is  not  to  substantially  lessen  competition. 

Nor  shall  anything  herein  contained  be  construed  to  prohibit  any  common 
carrier  subject  to  the  laws  to  regulate  commerce  from  aiding  in  the  construc- 
tion of  branches  or  short  lines  so  located  as  to  become  feeders  to  the  main 
line  of  the  company  so  aiding  in  such  construction  or  from  acquiring  or 
owning  all  or  any  part  of  the  stock  of  such  branch  lines,  nor  to  prevent  any 
such  common  carrier  from  acquiring  and  owning  all  or  any  part  of  the  stock 
of  a  branch  or  short  line  constructed  by  an  independent  company  where  there 
is  no  substantial  competition  between  the  company  owning  the  branch  line  so 
constructed  and  the  company  owning  the  main  line  acquiring  the  property 
or  an  interest  therein,  nor  to  prevent  such  common  carrier  from  extending 
any  of  its  lines  through  the  medium  of  the  acquisition  of  stock  or  otherwise 
of  any  other  such  common  carrier  where  there  is  no  substantial  competition 
between  the  company  extending  its  lines  and  the  company  whose  stock,  prop- 
erty, or  an  interest  therein  is  so  acquired. 

Nothing  contained  in  this  section  shall  be  held  to  affect  or  impair  any 
right  heretofore  legally  acquired :  Provided,  That  nothing  in  this  section 
shall  be  held  or  construed  to  authorize  or  make  lawful  anything  heretofore 
prohibited  or  made  illegal  by  the  anti-trust  laws,  nor  to  exempt  any  person 
from  the  penal  provisions  thereof  or  the  civil  remedies  therein  provided. 

INTERLOCKING  DIRECTORATES. 

SEC.  8.  That  from  and  after  two  years  from  the  date  of  the  approval  of 
this  Act  no  person  shall  at  the  same  time  be  i  director  or  other  officer  or 
employee  of  more  than  one  bank,  banking  association  or  trust  company, 


322          FEDERAL  AND  STATE  STATUTES. 

organized  or  operating  under  the  laws  of  the  United  States,  either  of  which 
has  deposits,  capital,  surplus,  and  undivided  profits  aggregating  more  than 
$5,000,000;  and  no  private  banker  or  person  who  is  a  director  in  any  bank 
or  trust  company,  organized  and  operating  under  the  laws  of  a  State,  having 
deposits,  capital,  surplus,  and  undivided  profits  aggregating  more  than  $5,000,- 
000,  shall  be  eligible  to  be  a  director  in  any  bank  or  banking  association 
organized  or  operating  under  the  laws  of  the  United  States.  *  *  *  * 

No  bank,  banking  association  or  trust  company,  organized  or  operating 
under  the  laws  of  the  United  States,  in  any  city  or  incorporated  town  or 
village  of  more  than  two  hundred  thousand  inhabitants,  as  shown  by  the 
last  preceding  decennial  census  of  the  United  States,  shall  have  as  a  director 
or  other  officer  or  employee  any  private  banker  or  any  director  or  other 
officer  or  employee  of  any  other  bank,  banking  association  or  trust  company 
located  in  the  same  place :  Provided,  That  nothing  in  this  section  shall  apply 
to  mutual  savings  banks  not  having  a  capital  stock  represented  by  shares : 
Provided  further,  That  a  director  or  other  officer  of  employee  of  such  bank, 
banking  association,  or  trust  company  may  be  a  director  or  other  officer  or 
employee  of  not  more  than  one  other  bank  or  trust  company  organized  under 
the  laws  of  the  United  States  or  any  State  where  the  entire  capital  stock  of 
one  is  owned  by  stockholders  in  the  other :  And  provided  further,  That  noth- 
ing contained  in  this  section  shall  forbid  a  director  of  class  A  of  a  Federal 
reserve  bank,  as  defined  in  the  Federal  Reserve  Act  from  being  an  officer 
or  director  or  both  an  officer  and  director  in  one  member  bank. 

That  from  and  after  two  years  from  the  date  of  the  approval  of  this  Act 
no  person  at  the  same  time  shall  be  a  director  in  any  two  or  more  corpora- 
tions, any  one  of  which  has  capital,  surplus,  and  undivided  profits  aggregating 
more  than  $1,000,000,  engaged  in  whole  or  in  part  in  commerce,  other  than 
banks,  banking  associations,  trust  companies  and  common  carriers  subject  to 
the  Act  to  regulate  commerce,  approved  February  fourth,  eighteen  hundred 
and  eighty-seven,  if  such  corporations  are  or  shall  have  been  theretofore,  by 
virtue  of  their  business  and  location  of  operation,  competitors,  so  that  the 
elimination  of  competition  by  agreement  between  them  would  constitute  a 
violation  of  any  of  the  provisions  of  any  of  the  anti-trust  laws. 

CRIMINAL  PROSECUTION  OF  OFFICERS  OF  CORPORATIONS. 

SEC.  9.  Provides  for  criminal  prosecution  of  president,  director,  officer  or 
manager  of  any  firm  or  corporation  who  embezzles,  steals  or  willfully  mis- 
applies moneys,  funds,  credits,  securities,  property  or  assets  accruing  from 
or  used  in  interstate  commerce. 


INTERLOCKING  DIRECTORATES   WITH   COMPANIES   FURNISH- 
ING SUPPLIES. 

SEC.  10.  That  after  two  years  from  the  approval  of  this  Act  no  common 
carrier  engaged  in  commerce  shall  have  any  dealings  in  securities,  supplies 
or  other  articles  of  commerce,  or  shall  make  or  have  any  contracts  for  con- 
struction or  maintenance  of  any  kind,  to  the  amount  of  more  than  $50,000, 
in  the  aggregate,  in  any  one  year,  with  another  corporation,  firm,  partnership 
or  association  when  the  said  common  carrier  shall  have  upon  its  board  of 


FEDERAL  AND  STATE  STATUTES.         323 

directors  or  as  it  president,  manager  or  as  its  purchasing  or  selling  officer, 
or  agent  in  the  particular  transaction,  any  person  who  is  at  the  same  time  a 
director,  manager,  or  purchasing  or  selling  officer  of,  or  who  has  any  sub- 
stantial interest  in,  such  other  corporation,  firm,  partnership  or  association, 
unless  and  except  such  purchases  shall  be  made  from,  or  such  dealings  shall 
be  with,  the  bidder  whose  bid  is  the  most  favorable  to  such  common  carrier, 
to  be  ascertained  by  competitive  bidding  under  regulations  to  be  prescribed 
by  rule  or  otherwise  by  the  Interstate  Commerce  Commission.  No  bid  shall, 
be  received  unless  the  name  and  address  of  the  bidder  or  the  names  and 
addresses  of  the  officers,  directors  and  general  managers  thereof,  if  the 
bidder  be  a  corporation,  or  of  the  members,  if  it  be  a  partnership  or  firm, 
be  given  with  the  bid. 

Any  person  who  shall,  directly  or  indirectly,  do  or  attempt  to  do  anything 
to  prevent  anyone  from  bidding  or  shall  do  any  act  to  prevent  free  and  fair 
competition  among  the  bidders  or  those  desiring  to  bid  shall  be  punished 
as  prescribed  in  this  section  in  the  case  of  an  officer  or  director. 

PROCEDURE  FOR  ENFORCEMENT  OF  ACT. 

SEC.  11.  That  authority  to  enforce  compliance  with  sections  two,  three, 
seven  and  eight  of  this  Act  by  the  persons  respectively  subject  thereto  is 
hereby  vested:  in  the  Interstate  Commerce  Commission  where  applicable  to 
common  carriers,  in  the  Federal  Reserve  Board  where  applicable  to  banks, 
banking  associations  and  trust  companies,  and  in  the  Federal  Trade  Commis- 
sion where  applicable  to  all  other  character  of  commerce,  to  be  exercised  as 
follows : 

(1)  Whenever  the  commission  or  board  vested  with  jurisdiction  thereof 
shall  have  reason  to  believe  that  any  person  is  violating  or  has  violated  any 
of  the  provisions  of  sections  two,  three,  seven  and  eight  of  this  Act,  it  shall 
issue  and  serve  upon  such  person  a  complaint  stating  its  charges  in  that 
respect,  and  containing  a  notice  of  a  hearing  upon  a  day  and  at  a  place  therein 
fixed  at  least  thirty  days  after  the  service  of  said  complaint. 

(2)  The  person  so  complained  of  shall  have  the  right  to  appear  at  the 
place  and  time  so  fixed  and  show  cause  why  an  order  should  not  be  entered 
by  the  commission  or  board  requiring  such  person  to  cease  and  desist  from 
the  violation  of  the  law  so  charged  in  said  complaint.    Any  person  may  make 
application,  and  upon  good  cause  shown  may  be  allowed  by  the  commission 
or  board,  to  intervene  and  appear  in  said  proceeding  by  counsel  or  in  person. 
The  testimony  in  any  such  proceeding  shall  be  reduced  to  writing  and  filed 
in  the  office  of  the  commission  or  board. 

(3)  If  upon  such  hearing  the  commission  or  board,  as  the  case  may  be, 
shall  be  of  the  opinion  that  any  of  the  provisions  of  said  sections  have  been 
or  are  being  violated,  it  shall  make  a  report  in  writing  in  which  it  shall  state 
its  findings  as  to  the  facts,  and  shall  issue  and  cause  to  be  served  on  such 
person  an  order  requiring  such  person  to  cease  and  desist  from  such  violations, 
and  divest  itself  of  the  stock  held  or  rid  itself  of  the  directors  chosen  con- 
trary to  the  provisions  of  sections  seven  and  eight  of  this  Act,  if  any  there 
be,  in  the  manner  and  within  the  time  fixed  by  said  order.    Until  a  transcript 
of  the  record  in  such  hearing  shall  have  been  filed  in  a  circuit' court  of  appeals 


324          FEDERAL  AND  STATE  STATUTES. 

of  the  United  States,  as  hereinafter  provided,  the  commission  or  board  may 
at  any  time,  upon  such  notice  and  in  such  manner  as  it  shall  deem  proper, 
modify  or  set  aside,  in  whole  or  in  part,  any  report  or  any  order  made  or 
issued  by  it  under  this  section. 

(4)  If  such  person  fails  or  neglects  to  obey  such  order  of  the  commission 
or  board  while  the  same  is  in  effect,  the  commission  or  board  may  apply  to 
the  circuit  court  of  appeals  of  the  United  States,  within  any  circuit  where 
the  violation  complained  of  was  or  is  being  committed  or  where  such  person 
resides  or  carries  on  business,  for  the  enforcement  of  its  order,  and  shall 
certify  and  file  with  its  application  a  transcript  of  the  entire  record  in  the 
proceeding,  including  all  the  testimony  taken  and  the  report  and  order  of  the 
commission  or  board.    Upon  such  filing  of  the  application  and  transcript  the 
court  shall  cause  notice  thereof  to  be  served  upon  such  person  and  thereupon 
shall   have  jurisdiction   of  the  proceeding  and  of  the  question   determined 
therein,  and  shall  have  power  to  make  and  enter  upon  the  pleadings,  testi- 
mony, and  proceedings  set  forth  in  such  transcript  a  decree  affirming,  modi- 
fying, or  setting  aside  the  order  of  the  commission  or  board.     The  findings 
of  the  commission  or  board  as  to  the  facts,  if  supported  by  testimony,  shall 
be  conclusive.    *    *    *    * 

(5)  The  judgment  and  decree  of  the  court  shall  be  final,  except  that  the 
same  shall  be  subject  to  review  by  the  Supreme  Court  upon  certiorari  as  pro- 
vided in  section  two  hundred  and  forty  of  the  Judicial  Code. 

(6)  Any  party  required  by  such  order  of  the  commission  or  board  to 
cease  and  desist  from  a  violation  charged  may  obtain  a  review  of  such  order 
in  said  circuit  court  of  appeals  by  filing  in  the  court  a  written  petition  pray- 
ing that  the  order  of  the  commission  or  board  be  set  aside.    A  copy  of  such 
petition  shall  be  forthwith  served  upon  the  commission  or  board,  and  there- 
upon the  commission  or  board  forthwith  shall  certify  and  file  in  the  court 
a  transcript  of  the  record  as  hereinbefore  provided.    Upon  the  filing  of  the 
transcript  the  court  shall  have  the  same  jurisdiction  to  affirm,  set  aside,  or 
modify  the  order  of  the  commission  or  board  as  in  the  case  of  an  application 
by  the  commission  or  board  for  the  enforcement  of  its  order,  and  the  findings 
of  the  commission  or  board  as  to  the  facts,  if  supported  by  testimony,  shall 
in  like  manner  be  conclusive. 

The  jurisdiction  of  the  circuit  court  of  appeals  of  the  United  States  to 
enforce,  set  aside,  or  modify  orders  of  the  commission  or  board  shall  be 
exclusive. 

DISTRICT  FOR  SUIT  AGAINST  CORPORATION. 

SEC.  12.  That  any  suit,  action,  or  proceeding  under  the  anti-trust  laws 
against  a  corporation  may  be  brought  not  only  in  the  judicial  district  whereof 
it  is  an  inhabitant,  but  also  in  any  district  wherein  it  may  be  found  or 
transacts  business ;  and  all  process  in  such  cases  may  be  served  in  the  district 
of  which  it  is  an  inhabitant,  or  wherever  it  may  be  found. 

WITNESSES. 

SEC.  13.  Provides  that  witnesses  may  be  brought  from  districts  outside  of 
that  in  which  sui't  is  brought,  i.  e.,  from  anywhere  in  the  United  States. 


FEDERAL   AND   STATE   STATUTES.  325 

PERSONAL  LIABILITY  OF  OFFICERS   OF  CORPORATIONS. 

SEC.  14.  That  whenever  a  corporation  shall  violate  any  of  the  penal  pro- 
visions of  the  anti-trust  laws,  such  violation  shall  be  deemed  to  be  also  that 
of  the  individual  directors,  officers,  or  agents  of  such  corporation  who  shall 
have  authorized,  ordered,  or  done  any  of  the  acts  constituting  in  whole  or 
in  part  such  violation,  and  such  violation  shall  be  deemed  a  misdemeanor, 
and  upon  conviction  therefor  of  any  such  director,  officer,  or  agent  he  shall 
be  punished  by  a  fine  of  not  exceeding  $5,000  or  by  imprisonment  for  not 
exceeding  one  year,  or  by  both,  in  the  discretion  of  the  court. 

RESTRAINT  OF  VIOLATIONS  OF  ACT. 

SEC.  IS.  Provides  that  United  States  District  Attorneys  shall  institute  pro- 
ceedings in  equity  to  prevent  and  restrain  violations  of  the  Act. 

INJUNCTIONS  AGAINST  THREATENED  VIOLATIONS. 

SEC.  16.  That  any  person,  firm,  corporation,  or  association  shall  be  en- 
titled to  sue  for  and  have  injunctive  relief,  in  any  court  of  the  United  States 
having  jurisdiction  over  the  parties,  against  threatened  loss  or  damage  by  a 
violation  of  the  anti-trust  laws,  including  sections  two,  three,  seven  and 
eight  of  this  Act,  when  and  under  the  same  conditions  and  principles  as 
injunctive  relief  against  threatened  conduct  that  will  cause  loss  or  damage 
is  granted  by  courts  of  equity,  under  the  rules  governing  such  proceeding, 
and  upon  the  execution  of  proper  bond  against  damages  for  an  injunction 
improvidently  granted  and  a  showing  that  the  danger  of  irreparable  loss  or 
damage  is  immediate,  a  preliminary  injunction  may  issue:  Provided,  That 
nothing  herein  contained  shall  be  construed  to  entitle  any  person,  firm,  corpor- 
ation, or  association,  except  the  United  States,  to  bring  suit  in  equity  for 
injunctive  relief  against  any  common  carrier  subject  to  the  provisions  of 
the  Act. 

PRELIMINARY  INJUNCTIONS. 

SEC.  17.  That  no  preliminary  injunction  shall  be  issued  without  notice 
to  the  opposite  party. 

No  temporary  restraining  order  shall  be  granted  without  notice  to  the 
opposite  party  unless  it  shall  clearly  appear  from  specific  facts  shown  by 
affidavit  or  by  the  verified  bill  that  immediate  and  irreparable  injury,  loss, 
or  damage  will  result  to  the  applicant  before  notice  can  be  served  and  a 
hearing  had  thereon. 

SEC.  18.  Provides  for  security  being  entered  before  preliminary  injunctions 
can  issue  under  the  Act. 

SEC.  19.  Provides  that  every  order  of  injunction  shall  specifically  describe 
the  acts  restrained. 

INJUNCTIONS  IN  LABOR  DISPUTES. 

SEC.  20.  Provides  that  no  injunction  shall  be  granted  in  cases  between 
employer  and  employees  involving  terms  or  conditions  of  employment,  unless 
necessary  to  prevent  irreparable  injury  to  property.  And  no  such  restraining 


326         FEDERAL  AND  STATE  STATUTES. 

order  or  injunction  shall  prohibit  any  person  or  persons,  whether  singly  or 
in  concert,  from  terminating  any  relation  of  employment,  or  from  ceasing 
to  perform  any  work  or  labor,  or  from  recommending,  advising,  or  persuad- 
ing others  by  peaceful  means  so  to  do ;  or  from  attending  at  any  place  where 
any  such  person  or  persons  may  lawfully  be,  for  the  purpose  of  peacefully 
obtaining  or  communicating  information,  or  from  peacefully  persuading  any 
person  to  work  or  to  abstain  from  working;  or  from  ceasing  to  patronize 
or  to  employ  any  party  to  such  dispute,  or  from  recommending,  advising,  or 
persuading  others  by  peaceful  and  lawful  means  so  to  do;  or  from  paying 
or  giving  to,  or  withholding  from,  any  person  engaged  in  such  dispute,  any 
strike  benefits  or  other  moneys  or  things  of  value;  or  from  peaceably  assem- 
bling in  a  lawful  manner,  and  for  lawful  purposes;  or  from  doing  any  act 
or  thing  which  might  lawfully  be  done  in  the  absence  of  such  dispute  by  any 
party  thereto ;  nor  shall  any  of  the  acts  specified  in  this  paragraph  be  con- 
sidered or  held  to  be  violations  of  any  law  of  the  United  States. 

CONTEMPT. 

SEC.  21.  Provides  that  persons  violating  the  Act  may  not  only  be  proceeded 
against  criminally,  but  also  may  be  punished  for  contempt. 

PROCEDURE  IN  CONTEMPT  CASES. 
JURY  TRIALS. 

SEC.  22.  That  whenever  it  shall  be  made  to  appear  to  any  district  court 
or  judge  thereof,  or  to  any  judge  therein  sitting,  by  the  return  of  a  proper 
officer  on  lawful  process,  or  upon  the  affidavit  of  some  credible  person,  or 
by  information  filed  by  any  district  attorney,  that  there  is  reasonable  ground 
to  believe  that  any  person  has  been  guilty  of  such  contempt,  the  court  or 
judge  thereof,  or  any  judge  therein  sitting,  may  issue  a  rule  requiring  the 
said  person  so  charged  to  show  cause  upon  a  day  certain  why  he  should 
not  be  punished  therefor,  which  rule,  together  with  a  copy  of  the  affidavit 
or  information,  shall  be  served  upon  the  person  charged,  with  sufficient 
promptness  to  enable  him  to  prepare  for  and  make  return  to  the  order  at 
the  time  fixed  therein.  If  upon  or  by  such  return,  in  the  judgment  of  the 
court,  the  alleged  contempt  be  not  sufficiently  purged,  a  trial  shall  be  directed 
at  a  time  and  place  fixed  by  the  court:  Provided,  however,  That  if  the  ac- 
cused, being  a  natural  person,  fail  or  refuse  to  make  return  to  the  rule  to 
show  cause,  an  attachment  may  issue  against  his  person  to  compel  an  answer, 
and  in  case  of  his  continued  failure  or  refusal,  or  if  for  any  reason  it  be 
impracticable  to  dispose  of  the  matter  on  the  return  day,  he  may  be  required 
to  give  reasonable  bail  for  his  attendance  at  the  trial  and  his  submission  to 
the  final  judgment  of  the  court.  Where  the  accused  is  a  body  corporate,  an 
attachment  for  the  sequestration  of  its  property  may  be  issued  upon  like 
refusal  or  failure  to  answer. 

In  all  cases  within  the  purview  of  this  Act  such  trial  may  be  by  the  court, 
or,  upon  demand  of  the  accused,  by  a  jury;  in  which  latter  event  the  court 
may  impanel  a  jury  from  the  jurors  then  in  attendance,  or  the  court  or  the 
judge  thereof  in  chambers  may  cause  a  sufficient  number  of  jurors  to  be 
selected  and  summoned,  as  provided  by  law,  to  attend  at  the  time  and  place 


FEDERAL  AND  STATE  STATUTES.         327 

of  trial,  at  which  time  a  jury  shall  be  selected  and  impaneled  as  upon  a 
trial  for  misdemeanor;  and  such  trial  shall  conform,  as  near  as  may  be,  to 
the  practice  in  criminal  cases  prosecuted  by  indictment  or  upon  information. 

If  the  accused  be  found  guilty,  judgment  shall  be  entered  accordingly, 
prescribing  the  punishment,  either  by  fine  or  imprisonment,  or  both,  in  the 
discretion  of  the  court.  Such  fine  shall  be  paid  to  the  United  States  or  to 
the  complainant  or  other  party  injured  by  the  act  constituting  the  contempt, 
or  may,  where  more  than  one  is  so  damaged,  be  divided  or  apportioned  among 
them  as  the  court  may  direct,  but  in  no  case  shall  the  fine  to  be  paid  to  the 
United  States  exceed,  in  case  the  accused  is  a  natural  person,  the  sum  of 
$1,000,  nor  shall  such  imprisonment  exceed  the  term  of  six  months. 

SEC.  23.     Provides  for  appeal  in  contempt  cases. 


CONTEMPTS  COMMITTED  IN  PRESENCE  OF  COURT. 

SEC.  24.  That  nothing  herein  contained  shall  be  construed  to  relate  to  con- 
tempts committed  in  the  presence  of  the  court,  or  so  near  thereto  as  to  ob- 
struct the  administration  of  justice,  nor  to  contempts  committed  in  dis- 
obedience of  any  lawful  writ,  process,  order,  rule,  decree,  or  command  en- 
tered in  any  suit  or  action  brought  or  prosecuted  in  the  name  of,  or  on 
behalf  of,  the  United  States,  but  the  same,  and  all  other  cases  of  contempt 
not  specifically  embraced  within  section  twenty-one  of  this  Act,  may  be 
punished  in  conformity  to  the  usages  at  law  and  in  equity  now  prevailing. 

SEC.  25.  Provides  that  no  proceeding  for  contempt  shall  be  instituted 
unless  begun  within  one  year  from  date  of  the  act  complained  of. 

CONSTITUTIONALITY  OF  SECTIONS  OF  THE  ACT. 

SEC.  26.  If  any  clause,  sentence,  paragraph,  or  part  of  this  Act  shall,  for 
any  reason,  be  adjudged  by  any  court  of  competent  jurisdiction  to  be  invalid, 
such  judgment  shall  not  affect,  impair,  or  invalidate  the  remainder  thereof, 
but  shall  be  confined  in  its  operation  to  the  clause,  sentence,  paragraph,  or 
part  thereof  directly  involved  in  the  controversy  in  which  such  judgment 
shall  have  been  rendered. 

Approved  October  15,  1914. 


THE  ARBITRATION  ACT. 

Act  of  July  15,  1913,  known  as  the  Newlands  Act. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the   United 
States  of  America  in  Congress  assembled, 

That  the  provisions  of  this  Act  shall  apply  to  any  common  carrier  or 
carriers  and  their  officers,  agents,  and  employes,  except  masters  of  vessels  and 
seamen,  as  defined  in  section  forty-six  hundred  and  twelve,  Revised  Statutes 
of  the  United  States,  engaged  in  the  transportation  of  passengers  or  property 


328  FEDERAL   AND   STATE   STATUTES. 

wholly  by  railroad,  or  partly  by  railroad  and  partly  by  water,  for  a  continu- 
ous carriage  or  shipment  from  one  State  or  Territory  of  the  United  States 
or  the  District  of  Columbia  to  any  other  State  or  Territory  of  the  United 
States  or  the  District  of  Columbia,  or  from  any  place  in  the  United  States 
to  an  adjacent  foreign  country,  or  from  any  place  in  the  United  States 
through  a  foreign  country  to  any  other  place  in  the  United  States.  *  *  *  * 

SEC.  2.  That  whenever  a  controversy  concerning  wages,  hours  of  labor, 
or  conditions  of  employment  shall  arise  between  an  employer  or  employers 
and  employes  subject  to  this  Act  interrupting  or  threatening  to  interrupt  the 
business  of  said  employer  or  employers  to  the  serious  detriment  of  the  public 
interest,  either  party  to  such  controversy  may  apply  to  the  Board  of  Media- 
tion and  Conciliation  created  by  this  Act  and  invoke  its  services  for  the 
purpose  of  bringing  about  an  amicable  adjustment  of  the  controversy;  and 
upon  the  request  of  either  party  the  said  board  shall  with  all  practicable 
expedition  put  itself  in  communication  with  the  parties  to  such  controversy 
and  shall  use  its  best  efforts,  by  mediation  and  conciliation,  to  bring  them  to 
an  agreement;  and  if  such  efforts  to  bring  about  an  amicable  adjustment 
through  mediation  and  conciliation  shall  be  unsuccessful,  the  said  board  shall 
at  once  endeavor  to  induce  the  parties  to  submit  their  controversy  to  arbitra- 
tion in  accordance  with  the  provisions  of  this  Act. 

In  any  case  in  which  an  interruption  of  traffic  is  imminent  and  fraught 
with  serious  detriment  to  the  public  interest,  the  Board  of  Mediation  and 
Conciliation  may,  .if  in  its  iudgment  such  action  seem  desirable,  proffer  its 
services  to  the  respective  parties  to  the  controversy. 

In  any  case  in  which  a  controversy  arises  over  the  meaning  or  the  applica- 
tion of  any  agreement  reached  through  mediation  under  the  provisions  of 
this  Act  either  party  to  the  said  agreement  may  apply  to  the  Board  of 
Mediation  and  Conciliation  foi  an  expression  of  opinion  from  such  board 
as  to  the  meaning  or  application  of  such  agreement  and  the  said  board  shall 
upon  receipt  of  such  request  give  its  opinion  as  soon  as  may  be  practicable. 

SEC.  3.  That  whenever  a  controversy  shall  arise  between  an  employer  or 
employers  and  employes  subject  to  this  Act,  which  cannot  be  settled  through 
mediation  and  conciliation  in  the  manner  provided  in  the  preceding  section, 
such  controversy  may  be  submitted  to  the  arbitration  of  a  board  of  six,  or, 
if  the  parties  to  the  controversy  prefer  so  to  stipulate,  to  a  board  of  three 
persons,  which  board  shall  be  chosen  in  the  following  manner :  In  the  case 
of  a  board  of  three,  the  employer  or  employers  and  the  employes,  parties 
respectively  to  the  agreement  to  arbitrate,  shall  each  name  one  arbitrator ; 
and  the  two  arbitrators  thus  chosen  shall  select  the  third  arbitrator;  but 
in  the  event  of  their  failure  to  name  the  third  arbitrator  within  five  days 
after  their  first  meeting,  such  third  arbitrator  shall  be  named  by  the  Board 
of  Mediation  and  Conciliation.  In  the  case  of  a  board  of  six,  the  employer 
or  employers  and  the  employes,  parties  respectively  to  the  agreement  to 
arbitrate,  shall  each  name  two  arbitrators,  and  the  four  arbitrators  thus 
chosen  shall,  by  a  majority  vote,  select  the  remaining  two  arbitrators;  but 
in  the  event  of  their  failure  to  name  the  two  arbitrators  within  fifteen  days 
after  their  first  meeting  the  said  two  arbitrators,  or  as  many  of  them  as 
have  not  been  named,  shall  be  named  by  the  Board  of  Mediation  and  Con- 
ciliation. 


FEDERAL  AND  STATE  STATUTES.          329 

In  the  event  that  the  employes  engaged  in  any  given  controversy  are  not 
members  of  a  labor  organization,  such  employes  may  select  a  committee 
which  shall  have  the  right  to  name  the  arbitrator,  or  the  arbitrators,  who 
are  to  be  named  by  the  employes  as  provided  above  in  this  section. 

SEC.  4.     That  the  agreement  to  arbitrate — 
First.     Shall  be  in  writing; 

Second.  Shall  stipulate  that  the  arbitration  is  had  under  the  provisions 
of  this  Act; 

Third.  Shall  state  whether  the  board  of  arbitration  is  to  consist  of  three 
or  six  members ; 

Fourth.  Shall  be  signed  by  duly  accredited  representatives  of  the  em- 
ployer or  employers  and  of  the  employes; 

Fifth.  Shall  state  specifically  the  questions  to  be  submitted  to  the  said 
board  for  decision ; 

Sixth.  Shall  stipulate  that  a  majority  of  said  board  shall  be  competent 
to  make  a  valid  and  binding  award; 

Seventh.  Shall  fix  a  period  from  the  date  of  the  appointment  of  the 
arbitrator  or  arbitrators  necessary  to  complete  the  board,  as  provided  for 
in  the  agreement, «within  which  the  said  board  shall  commence  its  hearings ; 

Eighth.  Shall  fix  a  period  from  the  beginning  of  the  hearings  within 
which  the  said  board  shall  make  and  file  its  award:  Provided,  That  this 
period  shall  be  thirty  days  unless  a  different  period  be  agreed  to; 

Ninth.  Shall  provide  for  the  date  from  which  the  award  shall  become 
effective  and  shall  fix  the  period  during  which  the  said  award  shall  continue 
in  force; 

Tenth.  Shall  provide  that  the  respective  parties  to  the  award  will  each 
faithfully  execute  the  same; 

Eleventh.  Shall  provide  that  the  award  and  the  papers  and  proceedings, 
including  the  testimony  relating  thereto,  certified  under  the  hands  of  the 
arbitrators,  and  which  shall  have  the  force  and  effect  of  a  bill  of  exceptions, 
shall  be  filed  in  the  clerk's  office  of  the  district  court  of  the  United  States 
for  the  district  wherein  the  controversy  arises  or  the  arbitration  is  entered 
into,  and  shall  be  final  and  conclusive  upon  the  parties  to  the  agreement 
unless  set  aside  for  error  of  law  apparent  on  the  record; 

Twelfth.  May  also  provide  that  any  difference  arising  as  to  the  meaning 
or  the  application  of  the  provisions  of  an  award  made  by  a  board  of  arbitra- 
tion shall  be  referred  back  to  the  same  board  or  to  a  sub-committee  of  such 
board  for  a  ruling,  which  ruling  shall  have  the  same  force  and  effect  as  the 
original  award ;  and  if  any  member  of  the  original  board  is  unable  or  un- 
willing to  serve,  another  arbitrator  shall  be  named  in  the  same  manner  as 
such  original  member  was  named. 

SEC.  5.  (This  section  gives  the  arbitrators  the  power  to  administer  oaths, 
require  the  attendance  and  testimony  of  witnesses,  production  of  documents, 
etc.)  *  *  *  * 


330  FEDERAL   AND   STATE   STATUTES. 

SEC.  8.  That  the  award,  being  filed  in  the  clerk's  office  of  a  district  court 
of  the  United  States  as  hereinbefore  provided,  shall  go  into  practical  opera- 
tion, and  judgment  shall  be  entered  thereon  accordingly  at  the  expiration 
of  ten  days  from  such  filing,  unless  within  such  ten  days  either  party  shall 
file  exceptions  thereto  for  matter  of  law  apparent  upon  the  record,  in  which 
case  said  award  shall  go  into  practical  operation,  and  judgment  be  entered 
accordingly,  when  such  exceptions  shall  have  been  finally  disposed  of  either 
by  said  district  court  or  on  appeal  therefrom. 

At  the  expiration  of  ten  days  from  the  decision  of  the  district  court  upon 
exceptions  taken  to  said  award  as  aforesaid  judgment  shall  be  entered  in 
accordance  with  said  decision,  unless  during  said  ten  days  either  party  shall 
appeal  therefrom  to  the  circuit  court  of  appeals.  In  such  case  only  such 
portion  of  the  record  shall  be  transmitted  to  the  appellate  court  as  is 
necessary  to  the  proper  understanding  and  consideration  of  the  questions 
of  law  presented  by  said  exceptions  and  to  be  decided. 

The  determination  of  said  circuit  court  of  appeals  upon  said  questions 
shall  be  final,  and,  being  certified  by  the  clerk  thereof  to  said  district  court, 
judgment  pursuant  thereto  shall  thereupon  be  entered  by  said  district  court. 

If  exceptions  to  an  award  are  finally  sustained,  judgment  shall  be  entered 
setting  aside  the  award  in  whole  or  in  part;  but  in  such  case  the  parties 
may  agree  upon  a  judgment  to  be  entered  disposing  of  the  subject  matter 
of  the  controversy,  which  judgment  when  entered  shall  have  the  same  force 
and  effect  as  judgment  entered  upon  an  award. 

Nothing  in  this  Act  contained  shall  be  construed  to  require  an  employe  to 
render  personal  service  without  his  consent,  and  no  injunction  or  other  legal 
process  shall  be  issued  which  shall  compel  the  performance  by  any  employe 
against  his  will  of  a  contract  for  personal  labor  or  service.  *  *  *  * 

SEC.  10.  That  each  member  of  the  board  of  arbitration  created  under  the 
provisions  of  this  Act  shall  receive  such  compensation  as  may  be  fixed  by 
the  Board  of  Mediation  and  Conciliation,  together  with  his  traveling  and 
other  necessary  expenses.  *  *  *  * 

SEC.  11.  There  shall  be  a  Commissioner  of  Mediation  and  Conciliation, 
who  shall  be  appointed  by  the  President,  by  and  with  the  advice  and  consent 
of  the  Senate,  and  whose  salary  shall  be  $7,500  per  annum,  who  shall  hold 
his  office  for  a  term  of  seven  years  and  until  a  successor  qualifies,  and  who 
shall  be  removable  by  the  President  only  for  misconduct  in  office.  The 
President  shall  also  designate  not  more  than  two  other  officials  of  the  Gov- 
ernment who  have  been  appointed  by  and  with  the  advice  and  consent  of 
the  Senate,  and  the  officials  thus  designated,  together  with  the  Commissioner 
of  Mediation  and  Conciliation,  shall  constitute  a  board  to  be  known  as  the 
United  States  Board  of  Mediation  and  Conciliation. 

There  shall  also  be  an  Assistant  Commissioner  of  Mediation  and  Concilia- 
tion, who  shall  be  appointed  by  the  President,  by  and  with  the  advice  and 
consent  of  the  Senate,  and  whose  salary  shall  be  $5,000  per  annum.  In 
the  absence  of  the  Commissioner  of  Mediation  and  Conciliation,  or  when 
that  office  shall  become  vacant,  the  assistant  commissioner  shall  exercise  the 
functions  and  perform  the  duties  of  that  office.  Under  the  direction  of 
the  Commissioner  of  Mediation  and  Conciliation,  the  assistant  commissioner 


FEDERAL  AND  STATE  STATUTES.         331 

shall  assist  in  the  work  of  mediation  and  conciliation  and  when  acting  alone 
in  any  case  he  shall  have  the  right  to  take  acknowledgments,  receive  agree- 
ments of  arbitration  and  cause  the  notices  in  writing  to  be  served  upon  the 
arbitrators  chosen  by  the  respective  parties  to  the  controversy,  as  provided 
for  in  section  five  of  this  Act. 

The  Act  of  June  first,  eighteen  hundred  and  ninety-eight,  relating  to  the 
mediation  and  arbitration  of  controversies  between  railway  companies  and 
certain  classes  of  their  employes  is  hereby  repealed:  Provided,  That  any 
agreement  of  arbitration  which,  at  the  time  of  the  passage  of  this  Act,  shall 
have  been  executed  in  accordance  with  the  provisions  of  said  Act  of  June 
first,  eighteen  hundred  and  ninety-eight,  shall  be  governed  by  the  provisions 
of  said  Act  of  June  first,  eighteen  hundred  and  ninety-eight,  and  the  pro- 
ceedings thereunder  shall  be  conducted  in  accordance  with  the  provisions 
of  said  Act. 


THE  SAFETY  APPLIANCE  ACT. 

Act  March  2,   1893. 

AN  ACT  to  promote  the  safety  of  employees  and  travelers  upon  railroads 
by  compelling  common  carriers  engaged  in  interstate  commerce  to  equip 
their  cars  with  automatic  couplers  and  continuous  brakes  and  their 
locomotives  with  driving-wheel  brakes,  and  for  other  purposes. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America  in  Congress  assembled,  That  from  and  after  the  first  day 
of  January,  eighteen  hundred  and  ninety-eight,  it  shall  be  unlawful  for  any 
common  carrier  engaged  in  interstate  commerce  by  railroad  to  use  on  its 
line  any  locomotive  engine  in  moving  interstate  traffic  not  equipped  with  a 
power  driving-wheel  brake  and  appliances  for  operating  the  train-brake 
system,  or  to  run  any  train  in  such  traffic  after  said  date  that  has  not  a 
sufficient  number  of  cars  in  it  so  equipped  with  power  or  train  brakes  that 
the  engineer  on  the  locomotive  drawing  such  train  can  control  its  speed 
without  requiring  brakemen  to  use  the  common  hand  brake  for  that  purpose. 

SEC.  2.  That  on  and  after  the  first  day  of  January,  eighteen  hundred  and 
ninety-eight,  it  shall  be  unlawful  for  any  such  common  carrier  to  haul  or 
permit  to  be  hauled  or  used  on  its  line  any  car  used  in  moving  interstate 
traffic  not  equipped  with  couplers  coupling  automatically  by  impact,  and 
which  can  be  uncoupled  without  the  necessity  of  men  going  between  the  ends 
of  the  cars. 

SEC.  3.  That  when  any  person,  firm,  company,  or  corporation  engaged  in 
interstate  commerce  by  railroad  shall  have  equipped  a  sufficient  number  of 
its  cars  so  as  to  comply  with  the  provisions  of  section  one  of  this  Act,  it 
may  lawfully  refuse  to  receive  from  connecting  lines  of  road  or  shippers 
any  cars  not  equipped  sufficiently,  in  accordance  with  the  first  section  of  this 
Act,  with  such  power  or  train  brakes  as  will  work  and  readily  interchange 
with  the  brakes  in  use  on  its  own  cars,  as  required  by  this  Act. 

SEC.  4.  That  from  and  after  the  first  day  of  July,  eighteen  hundred  and 
ninety-five,  until  other  wise  ordered  by  the  Interstate  Commerce  Commission, 


332         FEDERAL  AND  STATE  STATUTES. 

it  shall  be  unlawful  for  any  railroad  company  to  use  any  car  in  interstate 
commerce  that  is  not  provided  with  secure  grab  irons  or  handholds  in  the 
ends  and  sides  of  each  car  for  greater  security  to  men  in  coupling  and 
uncoupling  cars. 

SEC.  5.  That  within  ninety  days  from  the  passage  of  this  Act  the  American 
Railway  Association  is  authorized  hereby  to  designate  to  the  Interstate 
Commerce  Commission  the  standard  height  of  drawbars  for  freight  cars, 
measured  perpendicular  from  the  level  of  the  tops  of  the  rails  to  the  centers 
of  the  drawbars,  for  each  of  the  several  gauges  of  railroads  in  use  in  the 
United  States,  and  shall  fix  a  maximum  variation  from  such  standard  height 
to  be  allowed  between  the  drawbars  of  empty  and  loaded  cars.  Upon  their 
determination  being  certified  to  the  Interstate  Commerce  Commission,  said 
Commission  shall  at  once  give  notice  of  the  standard  fixed  upon  to  all  com- 
mon carriers,  owners,  or  lessees  engaged  in  interstate  commerce  in  the 
United  States  by  such  means  as  the  Commission  may  deem  proper.  But 
should  said  association  fail  to  determine  a  standard  as  above  provided,  it 
shall  be  the  duty  of  the  Interstate  Commerce  Commission  to  do  so,  before 
July  first,  eighteen  hundred  and  ninety-four,  and  immediately  to  give  notice 
thereof  as  foresaid.  And  after  July  first,  eighteen  hundred  and  ninety-five, 
no  cars,  either  loaded  or  unloaded,  shall  be  used  in  interstate  traffic  which 
do  not  comply  with  the  standard  above  provided  for.  *  *  * 

Note. — Prescribed  standard  height  of  drawbars :  Standard-gauge  roads, 
34Vz  inches;  narrow-gauge  roads,  26  inches;  maximum  variation  between 
loaded  and  empty  cars,  3  inches. 


THE  HOURS  OF  SERVICE  ACT. 

Act  March  4,  1907. 

AN  ACT  to  promote  the  safety  of  employees  and  travelers  upon  railroads  by 
limiting  the  hours  of  service  of  employees  thereon. 

That  the  provisions  of  this  Act  shall  apply  to  any  common  carrier  or 
carriers,  their  officers,  agents,  and  employees,  engaged  in  the  transportation 
of  passengers  or  property  by  railroad  in  the  District  of  Columbia  or  any 
Territory  of  the  United  States,  or  from  one  State  or  Territory  of  the  United 
States  or  the  District  of  Columbia  to  any  other  State  or  Territory  of  the 
United  States  or  the  District  of  Columbia,  or  from  any  place  in  the  United 
States  to  an  adjacent  foreign  country,  or  from  any  place  in  the  United 
States  through  a  foreign  country  to  any  other  place  in  the  United  States. 
The  term  "railroad"  as  used  in  this  Act  shall  include  all  bridges  and  ferries 
used  or  operated  in  connection  with  any  railroad,  and  also  all  the  road  in 
use  by  any  common  carrier  operating  a  railroad,  whether  owned  or  operated 
under  a  contract,  agreement,  or  lease;  and  the  term  "employees"  as  used 
in  this  Act  shall  be  held  to  mean  persons  actually  engaged  in  or  connected 
with  the  movement  of  any  train. 


FEDERAL  AND  STATE  STATUTES.         333 

SEC.  2.  That  it  shall  be  unlawful  for  any  common  carrier,  its  officers  or 
agents,  subject  to  this  Act  to  require  or  permit  any  employee  subject  to  this 
Act  to  be  or  remain  on  duty  for  a  longer  period  than  sixteen  consecutive 
nours,  and  whenever  any  such  employee  of  such  common  carrier  shall  have 
been  continuously  on  duty  for  sixteen  hours  he  shall  be  relieved  and  not 
required  or  permitted  again  to  go  on  duty  until  he  has  had  at  least  ten 
consecutive  hours  off  duty;  and  no  such  employee  who  has  been  on  duty 
sixteen  hours  in  the  aggregate  in  any  twenty-four-hour  period  shall  be 
required  or  permitted  to  continue  or  again  go  on  duty  without  having  had 
at  least  eight  consecutive  hours  off  duty:  Provided,  That  no  operator,  train 
dispatcher,  or  other  employee  who  by  the  use  of  the  telegraph  or  telephone 
dispatches,  reports,  transmits,  receives,  or  delivers  orders  pertaining  to  or 
affecting  train  movements  shall  be  required  or  permitted  to  be  or  remain  on 
duty  for  a  longer  period  than  nine  hours  in  any  twenty-four-hour  period 
in  all  towers,  offices,  places,  and  stations  continuously  operated  night  and 
day,  nor  for  a  longer  period  than  thirteen  hours  in  all  towers,  offices,  places, 
and  stations  operated  only  during  the  daytime,  except  in  case  of  emergency, 
when  the  employees  named  in  this  proviso  may  be  permitted  to  be  and  remain 
on  duty  for  four  additional  hours  in  a  twenty-four-hour  period  on  not 
exceeding  three  days  in  any  week:  Provided  further,  The  Interstate  Com- 
merce Commission  may  after  full  hearing  in  a  particular  case  and  for  good 
cause  shown  extend  the  period  within  which  a  common  carrier  shall  comply 
with  the  provisions  of  this  proviso  as  to  such  case. 

SEC.  3.  That  any  such  common  carrier,  or  any  officer  or  agent  thereof, 
requiring  or  permitting  any  employee  to  go,  be,  or  remain  on  duty  in  viola- 
tion of  the  second  section  hereof,  shall  be  liable  to  a  penalty  of  not  to  exceed 
five  hundred  dollars  for  each  and  every  violation,  to  be  recovered  in  a  suit 
or  suits  to  be  brought  by  the  United  States  District  Attorney  in  the  District 
Court  of  the  United  States  having  jurisdiction  in  the  locality  where  such 
violation  shall  have  been  committed ;  and  it  shall  be  the  duty  of  such  District 
Attorney  to  bring  such  suits  upon  satisfactory  information  being  lodged  with 
him;  but.  no  such  suit  shall  be  brought  after  the  expiration  of  one  year 
from  the  date  of  such  violation ;  and  it  shall  also  be  the  duty  of  the  Interstate 
Commerce  Commission  to  lodge  with  the  proper  District  Attorneys  informa- 
tion of  any  such  violations  as  may  come  to  its  knowledge.  In  all  prosecutions 
under  this  Act  the  common  carrier  shall  be  deemed  to  have  had  knowledge 
of  all  acts  of  all  its  officers  and  agents :  Provided,  That  the  provisions  of 
this  Act  shall  not  apply  in  any  case  of  casualty  or  unavoidable  accident  or 
the  act  of  God;  nor  where  the  delay  was  the  result  of  a  cause  not  known 
to  the  carrier  or  its  officer  or  agent  in  charge  of  such  employee  at  the  time 
said  employee  left  a  terminal,  and  which  could  not  have  been  foreseen: 
Provided  further,  That  the  provisions  of  this  Act  shall  not  apply  to  the 
crews  of  wrecking  or  relief  trains. 


Note'.— In  Baltimore  &  Ohio  Railroad  Company  v.  Interstate  Commerce 
Commission,  221  U.  S.  612,  the  Supreme  Court  held  that  the  Hours  of  Service 
Act,  limiting  the  hours  of  service  of  employees  upon  railroads 
engaged  in  interstate  commerce  was  constitutional,  even  though  the 
interstate  and  intrastate  transactions  of  the  carriers  were  so  interwoven  that 


Return  to 


334  FEDERAL   AND    STATE   STATUTES. 

it  was  utterly  impracticable  to  divide  the  employees  so  that  those  engaged  in 
interstate  commerce  should  be  confined  to  that  commerce  exclusively.  As 
Congress  could  limit  the  hours  of  labor  of  those  engaged  in  interstate 
transportation,  it  necessarily  followed  that  its  will  could  not  be  frustrated 
by  the  commingling  of  duties  relating  to  intrastate  operations. 


THE  COMMODITIES  CLAUSE. 

Act  of  June  29,  1906. 
AN  ACT  to  regulate  commerce. 

From  and  after  May  first,  nineteen  hundred  and  eight,  it  shall  be  unlawful 
for  any  railroad  company  to  transport  from  any  State,  Territory,  or  the 
District  of  Columbia,  to  any  other  State,  Territory,  or  the  District  of 
Columbia,  or  to  any  foreign  country,  any  article  or  commodity,  other  than 
timber  and  the  manufactured  products  thereof,  manufactured,  mined,  or  pro- 
duced by  it,  or  under  its  authority,  or  which  it  may  own  in  whole  or  in 
part,  or  in  which  it  may  have  any  interest,  direct  or  indirect,  except  such 
articles  or  commodities  as  may  be  necessary  and  intended  for  its  use  in 
the  conduct  of  its  business  as  a  common  carrier. 


THE  EMPLOYERS'   LIABILITY  ACT. 

Act  of  Congress  of  April  22,  1908,  and  Amendment  of  April  5,  1910. 

AN  ACT  relating  to  the  liability  of  common  carriers  by  railroads  to  their  em- 
ployees in  certain  cases. 

Be  it  enacted,  etc.,  That  every  common  carrier  by  railroad,  while  engaging 
in  commerce  between  any  of  the  several  States  or  Territories,  or  between 
any  of  the  States  and  Territories,  or  between  the  District  of  Columbia  and  any 
of  the  States  or  Territories,  or  between  the  District  of  Columbia  or  any  of 
the  States  or  Territories  and  any  foreign  nation  or  nations,  shall  be  liable  in 
damages  to  any  person  suffering  injury  while  he  is  employed  by  such  carrier 
in  such  commerce,  or,  in  case  of  the  death  of  such  employee,  to  his  or  her 
personal  representative,  for  the  benefit  of  the  surviving  widow  or  husband 
and  children  of  such  employee;  and,  if  none,  then  of  such  employee's  parents; 
and,  if  none,  then  of  the  next  of  kin  dependent  upon  such  employee,  for 
such  injury  or  death  resulting  in  whole  or  in  part  from  the  negligence  of  any 
of  the  officers,  agents,  or  employees  of  such  carrier,  or  by  reason  of  any 
defect  or  insufficiency,  due  to  its  negligence,  in  its  cars,  engines,  appliances, 
machinery,  track,  roadbed,  works,  boats,  wharves,  or  other  equipment. 

SEC.  2.  That  every  common  carrier  by  railroad  in  the  Territories,  the 
District  of  Columbia,  the  Panama  canal  zone,  or  other  possessions  of  the 
United  States,  shall  be  liable  in  damages  to  any  person  suffering  injury  while 
he  is  employed  by  such  carrier  in  any  of  said  jurisdictions,  or,  in  case  of  the 
death  of  such  employee,  to  his  or  her  personal  representative,  for  the  benefit 
of  the  surviving  widow  or  husband  and  children  of  such  employee;  and,  if 


FEDERAL   AND   STATE   STATUTES.  335 

none,  then  of  such  employee's  parents;  and,  if  none,  then  of  the  next  of  kin 
dependent  upon  such  employee,  for  such  injury  or  death  resulting  in  whole 
or  in  part  from  the  negligence  of  any  of  the  officers,  agents,  or  employees  of 
such  carrier,  or  by  reason  of  any  neglect  or  insufficiency,  due  to  its  negligence, 
in  its  cars,  engines,  appliances,  machinery,  track,  roadbed,  works,  boats, 
wharves,  or  other  equipment. 

SEC.  3.  That  in  all  actions  hereafter  brought  against  any  such  common 
carrier  by  railroad  under  or  by  virtue  of  any  of  the  provisions  of  this  Act, 
to  recover  damages  for  personal  injuries  to  an  employee,  or  where  such 
injuries  have  resulted  in  his  death,  the  fact  that  the  employee  may  have  been 
guilty  of  contributory  negligence  shall  not  bar  a  recovery,  but  the  damages 
shall  be  diminished  by  the  jury  in  proportion  to  the  amount  of  negligence 
attributable  to  such  employee :  Provided,  That  no  such  employee  who  may 
be  injured  or  killed  shall  be  held  to  have  been  guilty  of  contributory  negli- 
gence in  any  case  where  the  violation  by  such  common  carrier  of  any  statute 
enacted  for  the  safety  of  employees  contributed  to  the  injury  or  death  of 
such  employee. 

SEC.  4.  That  in  any  action  brought  against  any  common  carrier  under  or 
by  virtue  of  any  of  the  provisions  of  this  Act  to  recover  damages  for 
injuries  to,  or  the  death  of,  any  of  its  employees,  such  employee  shall  not 
be  held  to  have  assumed  the  risks  of  his  employment  in  any  case  where  the 
violation  by  such  common  carrier  of  any  statute  enacted  for  the  safety  of 
employees  contributed  to  the  injury  or  death  of  such  employee. 

SEC.  5.  That  any  contract,  rule,  regulation,  or  device  whatsoever,  the 
purpose  or  intent  of  which  shall  be  to  enable  any  common  carrier  to  exempt 
itself  from  any  liability  created  by  this  act,  shall  to  that  extent  be  void: 
Provided,  That  in  any  action  brought  against  any  such  common  carrier 
under  or  by  virtue  of  any  of  the  provisions  of  this  act,  such  common  carrier 
may  set  off  therein  any  sum  it  has  contributed  or  paid  to  any  insurance, 
relief  benefit,  or  indemnity  that  may  have  been  paid  to  the  injured  employee 
or  the  person  entitled  thereto  on  account  of  the  injury  or  death  for  which 
said  action  was  brought. 

SEC.  6.  That  no  action  shall  be  maintained  under  this  Act  unless  com- 
menced within  two  years  from  the  day  the  cause  of  action  accrued. 

SEC.  7.  That  the  term  "common  carrier"  as  used  in  this  Act  shall  include 
the  receiver  or  receivers  or  other  persons  or  corporations  charged  with  the 
duty  of  the  management  and  operation  of  the  business  of  a  common  carrier. 

SEC.  8.  That  nothing  in  this  Act  shall  be  held  to  limit  the  duty  or  liability 
of  common  carriers,  or  to  impair  the  rights  of  their  employees  under  any 
other  Act  or  Acts  of  Congress.  *  *  *  * 

AMENDMENT  OF  1910  TO  EMPLOYERS'  LIABILITY  ACT. 

AN  ACT  to  amend  an  Act  entitled,  "An  Act  relating  to  the  liability  of  common 
carriers  by  railroad  to  their  employees  in  certain  cases,"  approved  April 
twenty-second,  nineteen  hundred  and  eight. 

Be  it  enacted,  etc.,  That  an  Act  entitled  "An  Act  relating  to  the  liability 
of  common  carriers  by  railroad  to  their  employees  in  certain  cases,"  ap- 


336          FEDERAL  AND  STATE  STATUTES. 

proved   April   twenty-second,   nineteen   hundred    and   eight,   be   amended    in 
section  six  so  that  said  section  shall  read : 

SEC.  6.  That  no  action  shall  be  maintained  under  this  Act  unless  com- 
menced within  two  years  from  the  day  the  cause  of  action  accrued. 

"Lnder  this  Act  an  action  may  be  brought  in  a  circuit  court  of  the  United 
States,  in  the  district  of  the  residence  of  the  defendant,  or  in  which  the 
cause  of  action  arose,  or  in  which  the  defendant  shall  be  doing  business  at 
the  time  of  commencing  such  action.  The  jurisdiction  of  the  courts  of  the 
United  States  under  this  Act  shall  be  concurrent  with  that  of  the  courts  of 
the  several  States,  and  no  case  arising  under  this  Act  and  brought  in  any 
State  court  of  competent  jurisdiction  shall  be  removed  to  any  court  of  the 
United  States." 

SEC.  2.  That  said  Act  be  further  amended  by  adding  the  following  section 
as  section  nine  of  said  Act: 

"SEC.  9.  That  any  right  of  action  given  by  this  Act  to  a  person  suffering 
injury  shall  survive  to  his  or  her  personal  representative,  for  the  benefit  of 
the  surviving  widow  or  husband  and  children  of  such  employee,  and  if  none, 
then  of  such  employee's  parents;  and,  if  none,  then  of  the  next  of  kin 
dependent  upon  such  employee;  but  in  such  cases  there  shall  be  only  one 
recovery  for  the  same  injury." 

Approved,  April  5,  1910. 


WHITE  SLAVE  TRAFFIC  ACT. 

Act  of  June  25,  1910,  known  as  the  Mann  Act. 

Be  it  enacted,  etc.,  That  the  term  "interstate  commerce"  as  used  in 
this  Act,  shall  include  transportation  from  any  State  or  Territory  or  the 
District  of  Columbia  to  any  other  State  or  Territory  or  the  District  of 
Columbia,  and  the  term  "foreign  commerce,"  as  used  in  this  Act,  shall  include 
transportation  from  any  State  or  Territory  or  the  District  of  Columbia  to 
any  foreign  country  and  from  any  foreign  country  to  any  State  or  Territory 
or  the  District  of  Columbia. 

SEC.  2.  That  any  person  shall  knowingly  transport  or  cause  to  be 
transported,  or  aid  or  assist  in  obtaining  .transportation  for,  or  in  transport- 
ing, in  interstate  or  foreign  commerce,  or  in  any  Territory  or  in  the  District 
of  Columbia,  any  woman  or  girl  for  the  purpose  of  prostitution  or  de- 
bauchery, or  for  any  other  immoral  purpose,  or  with  the  intent  and  purpose 
to  induce,  entice,  or  compel  such  woman  or  girl  to  become  a  prostitute  or 
to  give  herself  up  to  debauchery,  or  to  engage  in  any  other  immoral  practice ; 
or  who  shall  knowingly  procure  or  obtain,  or  cause  to  be  procured  or  ob- 
tained, or  aid  or  assist  in  procuring  or  obtaining,  any  ticket  or  tickets,  or 
any  form  of  transportation  or  evidence  of  the  right  thereto,  to  be  used  by 
any  woman  or  girl  in  interstate  or  foreign  commerce,  or  in  any  Territory 
or  the  District  of  Columbia,  in  going  to  any  place  for  the  purpose  of 
prostitution  or  debauchery,  or  for  any  other  immoral  purpose,  or  with  the 


FEDERAL  AND  STATE  STATUTES.         337 

intent  or  purpose  on  the  part  of  such  person  to  induce,  entice,  or  compel 
her  to  give  herself  up  to  the  practice  of  prostitution,  or  to  give  herself  up 
to  debauchery,  or  any  other  immoral  practice,  whereby  any  such  woman 
or  girl  shall  be  transported  in  interstate  or  foreign  commerce,  or  in  any 
Territory  or  the  District  of  Columbia,  shall  be  deemed  guilty  of  a  felony, 
and  upon  conviction  thereof  shall  be  punished  by  a  fine  not  exceeding  five 
thousand  dollars,  or  by  imprisonment  of  not  more  than  five  years,  or  by  both 
such  fine  and  imprisonment,  in  the  discretion  of  the  court. 

SEC.  3.  That  any  person  who  shall  knowingly  persuade,  induce,  entice, 
or  coerce,  or  cause  to  be  persuaded,  induced,  enticed,  or  coerced,  or  aid 
or  assist  in  persuading,  inducing,  enticing,  or  coercing  any  woman  or  girl 
to  go  from  one  place  to  another  in  interstate  or  foreign  commerce,  or  in 
any  Territory  or  the  District  of  Columbia,  for  the  purpose  of  prostitution 
or  debauchery,  or  for  any  other  immoral  purpose,  or  with  the  intent  and 
purpose  on  the  part  of  such  person  that  such  woman  or  girl  shall  engage 
in  the  practice  of  prostitution  or  debauchery,  or  any  other  immoral  practice, 
whether  with  or  without  her  consent,  and  who  shall  thereby  knowingly 
cause  or  aid  or  assist  in  causing  such  woman  or  girl  to  go  and  to  be  carried 
or  transported  as  a  passenger  upon  the  line  or  route  of  any  common  carrier 
or  carriers  in  interstate  or  foreign  commerce,  or  any  Territory  or  the 
District  of  Columbia,  shall  be  deemed  guilty  of  a  felony  and  on  conviction 
thereof  shall  be  punished  by  a  fine  of  not  more  than  five  thousand  dollars, 
or  by  imprisonment  for  a  term  not  exceeding  five  years  or  by  both  such 
fine  and  imprisonment,  in  the  discretion  of  the  court. 

SEC.  4.  That  any  person  who  shall  knowingly  persuade,  induce,  entice, 
or  coerce  any  woman  or  girl  under  the  age  of  eighteen  years  from  any 
State  or  Territory  or  the  Djstrict  of  Columbia  to  any  other  State  or  Terri- 
tory or  the  District  of  Columbia,  with  the  purpose  and  intent  to  induce  or 
coerce  her,  or  that  she  shall  be  induced  or  coerced  to  engage  in  prostitution 
or  debauchery,  or  any  other  immoral  practice,  and  shall  in  furtherance  of 
such  purpose  knowingly  induce  or  cause  her  to  go  and  to  be  carried  or 
transported  as  a  passenger  in  interstate  commerce  upon  the  line  or  route 
of  any  common  carrier  or  carriers,  shall  be  deemed  guilty  of  a  felony,  and 
on  conviction  thereof  shall  be  punished  by  a  fine  of  not  more  than  ten 
thousand  dollars,  or  by  imprisonment  for  a  term  not  exceeding  ten  years, 
or  by  both  such  fine  and  imprisonment,  in  the  discretion  of  the  court. 

Note.— In  the  cases  of  Diggs  v.  United  States,  and  Caminetti  v.  United 
States,  220  Fed.  545,  which  were  heard  and  decided  together  on  April  8th, 
1915,  Diggs  and  Caminetti  were  charged  with  violating  the  White  Slave  Traffic 
Act  in  that  they  each  transported  a  woman  from  Sacramento,  California,  to 
Reno,  Nevada,  for  the  purpose  of  debauchery  and  for  an  immoral 
purpose.  The  defendants  were  found  guilty  in  the  lower  court  of 
the  crime  charged  and  appealed  to  the  United  States  Circuit  Court 
of  Appeals.  One  of  their  contentions  was  that  the  Court  in  its  instructions 
to  the  jury  gave  to  the  words  "concubine"  and  "mistress"  too  wide  and 
inclusive  a  meaning.  They  argued  that  by  transporting  the  women  for  the 
purpose  of  making  them  their  concubines  and  mistresses  they  were  not  guilty 
of  the  offense  defined  in  the  Act;  that  the  words  "prostitution  and  debauchery, 
or  any  other  immoral  practice,"  do  not  include  concubinage,  but  that  the 


338  FEDERAL   AND   STATE   STATUTES. 

immorality  denounced  by  the  White  Slave  Traffic  Act  is  only  commercialized 
vice.  The  Circuit  Court  of  Appeals  held  that  the  Federal  decisions  were 
against  these  contentions,  citing  Hoke  v.  United  States,  227  U.  S.  308;  Athana- 
saw  v.  United  States,  227  U.  S.  326;  United  States  v.  Bitty,  208  U.  S.  393. 
The  defendants  then  petitioned  the  United  States  Supreme  Court  for  a  writ 
of  certiorari,  which  was  denied  on  June  4,  1915,  and  afterwards,  upon  a  peti- 
tion for  rehearing,  was  granted  on  June  21,  1915.  The  matter  is  now  pending 
in  the  Supreme  Court. 

In  United  States  v.  Bitty,  supra,  the  defendant  was  indicted  with  the 
offense  of  having  imported  into  the  United  States  from  England  an  alien 
woman  for  an  immoral  purpose,  viz.,  that  she  should  live  with  him  as  his 
concubine  or  mistress,  in  violation  of  the  immigration  laws.  The  defendant 
maintained  that  his  purpose  in  importing  the  woman  was  not  immoral  within 
the  meaning  of  the  statute,  in  that  the  statute  referred  to  the  bringing  of 
such  women  into  this  country  for  the  purpose  of  prostitution.  The  Supreme 
Court  held  that  the  act  of  the  defendant  was  within  the  meaning  of  the 
statute.  In  Athanasaw  v.  United  States,  supra,  the  defendant  employed  a 
woman  at  Atlanta,  Ga.,  as  a  chorus  girl  and  paid  her  railroad  fare  to  Tampa, 
Fla.,  where  she  was  to  appear  in  a  musical  show.  He  then  led  her 
to  surroundings  such  as  tended  to  induce  her  to  give  herself  up  to  a 
condition  of  debauchery.  The  Supreme  Court  held  that  the  language 
of  the  White  Slave  Traffic  Act  is  directed  against  the  transportation  of 
any  woman  for  the  purpose  of  prostitution  or  debauchery  or  for  any  other 
immoral  purpose,  or  with  the  intention  and  purpose  to  induce,  entice  or 
compel  a  woman  to  become  a  prostitute,  or  give  herself  up  to  debauchery,  or 
engage  in  any  other  immoral  practice;  that  the  term  debauchery  as  used  in 
the  statute  has  an  idea  of  sexual  immorality,  and  that  the  act  of  the  defendant 
was  within  the  meaning  of  the  statute.  In  Hoke  et  al.  v.  United  States, 
supra,  one  of  the  defendants  induced  a  woman  to  go  from  New  Orleans,  La., 
to  Beaumont,  Texas,  for  the  purpose  of  prostitution.  The  defendants  claimed 
that  it  was  the  right  and  privilege  of  a  person  to  move  between  the  States, 
and  that  such  being  the  right,  another  cannot  be  made  guilty  of  a  crime  of 
inducing  or  aiding  in  the  exercise  of  it;  that  the  motive  or  intention  of  the 
passenger  is  not  a  matter  of  interstate  commerce;  that  the  States  are  the 
proper  parties  to  control  the  morals  of  their  citizens  and  to  define  prostitution 
as  a  crime.  The  Supreme  Court  sustained  the  conviction  of  the  defendants, 
stating  that  "It  is  misleading  to  say  that  men  and  women  have  rights;  their 
rights  cannot  fortify  or  sanction  their  wrongs,  and  if  they  employ  interstate 
transportation  as  a  facility  of  their  wrongs,  it  may  be  forbidden  to  them  to 
the  extent  of  the  Act  of  July  25,  1910,  and  we  need  go  no  further  in  the 
present  case." 

WEBB  ACT. 

AN  ACT  divesting  intoxicating  liquors  of  their  interstate  character  in  certain 
cases. 

Passed  over  the  President's  veto  by  the  Senate  February  28,  1913,  and 
by  the  House  of  Representatives  March  1,  1913. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America  in  Congress  Assembled,  That  the  shipment  or  transporta- 


FEDERAL  AND  STATE  STATUTES.          339 

tion  in  any  manner  or  by  any  means  whatsoever,  of  any  spirituous,  vinous, 
malted,  fermented,  or  other  intoxicating  liquor  of  any  kind,  from  one  State, 
Territory,  or  District  of  the  United  States,  or  place  noncontiguous 
to  but  subject  to  the  jurisdiction  thereof,  into  any  other  State, 
Territory,  or  District  of  the  United  States,  or  place  noncontiguous 
to  but  subject  to  the  jurisdiction  thereof,  or  from  any  foreign 
country  into  any  State,  Territory  or  District  of  the  United  States,  or  place 
noncontiguous  to  but  subject  to  the  jurisdiction  thereof,  which  said  spirituous, 
vinous,  malted,  fermented,  or  other  intoxicating  liquor  is  intended,  by  any 
person  interested  therein,  to  be  received,  possessed,  sold,  or  in  any  manner 
used,  either  in  the  original  package  or  otherwise,  in  violation  of  any  law  of 
such  State,  Territory,  or  District  of  the  United  States,  or  place  noncon- 
tiguous to  but  subject  to  the  jurisdiction  thereof,  is  hereby  prohibited. 


Note. — In  the  case  of  Adams  Express  Company  v.  Kentucky,  decided  by 
the  Supreme  Court  of  the  United  States  on  June  14th,  1915,  certain  intoxicat- 
ing liquors  were  bought  and  paid  for  in  Tennessee  and  were  transported  by 
the  express  company  from  that  State  into  the  State  of  Kentucky  for  the 
personal  use  of  the  consignee,  without  any  intention  on  his  part  to  dispose 
of  them  contrary  to  the  law  of  the  State.  Kentucky  had  a  local  option  law 
and  a  law  which  made  it  unlawful  for  any  public  or  private  carrier  to  bring 
intoxicating  liquors  into  any  county  or  place  where  the  sale  of  intoxicating 
liquors  had  been  prohibited.  The  Court  of  Appeals  of  Kentucky  decided 
"that  there  was  never  even  a  claim  of  a  right  on  the  part  of  the  Legislature 
to  interfere  with  a  citizen  using  liquor  for  his  own  comfort,  provided  that 
in  so  doing  he  committed  no  offence  against  public  decency  by  being  intoxi- 
cated." The  Supreme  Court  of  the  United  States  in  reviewing  the  case 
pointed  out  that  after  the  decision  in  Leisy  v.  Hardin,  Congress  passed  the 
Wilson  Act  of  1890,  which  made  intoxicating  liquors  transported  in  interstate 
commerce  subject  to  the  police  power  of  the  State  upon  their  arrival  in  the 
State.  The  Court  said  that  there  was  nothing  in  the  Wilson  Act  to  prevent 
the  shipment  of  liquor  in  interstate  commerce  for  the  use  of  the  consignee, 
provided  he  did  not  undertake  to  sell  it  in  violation  of  the  laws  of  the  State. 
Congress  thereupon  undertook  by  the  Webb  Act  to  prohibit  the  introduction 
of  liquors  into  the  States  by  means  of  interstate  commerce.  The  Webb  Act, 
however,  was  an  act  "divesting  intoxicating  liquors  of  their  interstate  char- 
acter in  certain  cases,"  and  did  not  assume  to  prohibit  all  interstate  shipments 
of  liquor  into  dry  territory.  The  plain  intention  of  Congress  was  to  render 
the  prohibition  of  the  statute  operative  only  where  the  liquor  was  to  be  dealt 
with  in  violation  of  the  local  law  of  the  State  into  which  it  is  shipped.  The 
Court  therefore  held  that,  by  the  provisions  of  the  Webb  Act,  shipments  into 
a  State  of  intoxicating  liquors,  intended  solely  for  the  personal  use  of  the 
consignee  and  not  to  be  used  in  violation  of  the  State  laws,  were  not  subject 
to  the  operation  of  a  State  statute,  as  in  the  Kentucky  case,  forbidding  car- 
riers to  bring  intoxicating  liquors  into  any  dry  territory. 


340          FEDERAL  AND  STATE  STATUTES. 

THE   FOOD  AND   DRUGS   ACT. 

Act  of  June  30,  1906. 

AN  ACT  for  preventing  the  manufacture,  sale  or  transportation  of  adulterated 
or  misbranded  or  poisonous  or  deleterious  foods,  drugs,  medicines  and 
liquors,  etc. 

SECTION  1.  That  it  shall  be  unlawful  for  any  person  to  manufacture 
within  any  Territory  or  the  District  of  Columbia  any  article  of  food  or 
drug  which  is  adulterated  or  misbranded,  within  the  meaning  of  this  Act; 
and  any  person  who  shall  violate  any  of  the  provisions  of  this  section  shall 
be  guilty  of  a  misdemeanor,  and  for  each  offense  shall,  upon  conviction 
thereof,  be  fined  not  to  exceed  five  hundred  dollars  or  shall  be  sentenced  to 
one  year's  imprisonment,  or  both  such  fine  and  imprisonment,  in  the  discretion 
of  the  court,  and  for  each  subsequent  offense  and  conviction  thereof  shall 
be  fined  not  less  than  one  thousand  dollars  or  sentenced  to  one  year's  im- 
prisonment, or  both  such  fine  and  imprisonment,  in  the  discretion  of  the 
court. 

SEC.  2.  That  the  introduction  into  any  State  or  Territory  or  the  District 
of  Columbia  from  any  other  State  or  Territory  or  the  District  of  Columbia, 
or  from  any  foreign  country,  or  shipment  to  any  foreign  country  of  any 
article  of  food  or  drugs  which  is  adulterated  or  misbranded,  within  the 
meaning  of  this  Act,  is  hereby  prohibited;  and  any  person  who  shall  ship 
or  deliver  for  shipment  from  any  State  or  Territory  or  the  District  of 
Columbia  to  any  other  State  or  Territory  or  the  District  of  Columbia,  or  to 
a  foreign  country,  or  who  shall  receive  in  any  State  or  Territory  or  the 
District  of  Columbia  from  any  other  State  or  Territory  or  the  District  of 
Columbia,  or  foreign  country,  and  having  so  received,  shall  deliver,  in 
original  unbroken  packages,  for  pay  or  otherwise,  or  offer  to  deliver  to  any 
other  person,  any  such  article  so  adulterated  or  misbranded  within  the 
meaning  of  this  Act,  or  any  person  who  shall  sell  or  offer  for  sale  in  the 
District  of  Columbia  or  the  Territories  of  the  United  States  any  such  adulter- 
ated or  misbranded  foods  or  drugs,  or  export  or  offer  to  export  the  same  to 
any  foreign  country,  shall  be  guilty  of  a  misdemeanor:  Provided,  That  no 
article  shall  be  deemed  misbranded  or  adulterated  within  the  provisions  of 
this  Act  when  intended  for  export  to  any  foreign  country  and  prepared  or 
packed  according  to  the  specifications  or  directions  of  the  foreign  purchaser 
when  no  substance  is  used  in  the  preparation  or  packing  thereof  in  conflict 
with  the  laws  of  the  foreign  country  to  which  said  article  is  intended  to  be 
shipped;  but  if  said  article  shall  be  in  fact  sold  or  offered  for  sale  for 
domestic  use  or  consumption,  then  this  proviso  shall  not  exempt  said  article 
from  the  operation  of  any  of  the  other  provisions  of  this  Act. 

(Sec.  3  provides  that  the  Secretary  of  Treasury,  Secretary  of  Agriculture, 
and  Secretary  of  Commerce  and  Labor  shall  make  regulations  for  carrying 
out  the  Act,  and  collecting  and  examining  specimens  of  foods  and  drugs.) 

SEC.  4.  That  the  examinations  of  specimens  of  foods  and  drugs  shall  be 
made  in  the  Bureau  of  Chemistry  of  the  Department  of  Agriculture,  or 
under  the  direction  and  supervision  of  such  Bureau,  for  the  purpose  of 


FEDERAL  AND  STATE  STATUTES.         341 

determining  from  such  examinations  whether  such  articles  are  adulterated 
or  misbranded  within  the  meaning  of  this  Act;  and  if  it  shall  appear  from 
any  such  examination  that  any  of  such  specimens  is  adulterated  or  mis- 
branded  within  the  meaning  of  this  Act,  the  Secretary  of  Agriculture  shall 
cause  notice  thereof  to  be  given  to  the  party  from  whom  such  sample  was 
obtained.  Any  party  so  notified  shall  be  given  an  opportunity  to  be  heard, 
under  such  rules  and  regulations  as  may  be  prescribed  as  aforesaid,  and  if 
it  appears  that  any  of  the  provisions  of  this  Act  have  been  violated  by  such 
party,  then  the  Secretary  of  Agriculture  shall  at  once  certify  the  facts  to 
the  proper  United  States  District  Attorney,  with  a  copy  of  the  results  of 
the  analysis  or  the  examination  of  such  article  duly  authenticated  by  the 
analyst  or  officer  making  such  examination,  under  the  oath  of  such  officer. 
After  judgment  of  the  court,  notice  shall  be  given  by  publication  in  such 
manner  as  may  be  prescribed  by  the  rules  and  regulations  aforesaid. 

SEC.  7.  That  for  the  purposes  of  this  Act  an  article  shall  be  deemed  to 
be  adulterated: 

In  case  of  drugs : 

First.  If,  when  a  drug  is  sold  under  or  by  a  name  recognized  in  the  United 
States  Pharmacopoeia  or  National  Formulary,  it  differs  from  the  standard 
of  strength,  quality,  or  purity,  as  determined  by  the  test  laid  down  in  the 
United  States  Pharmacopoeia  or  National  Formulary  official  at  the  time  of 
investigation :  Provided,  That  no  drug  defined  in  the  United  States  Pharma- 
copoeia or  National  Formulary  shall  be  deemed  to  be  adulterated  under  this 
provision  if  the  standard  of  strength,  quality,  or  purity  be  plainly  stated  upon 
the  bottle,  box,  or  other  container  thereof  although  the  standard  may  differ 
from  that  determined  by  the  test  laid  down  in  the  United  States  Pharma- 
copoeia or  National  Formulary. 

Second.  If  its  strength  or  purity  fall  below  the  professed  standard  or 
quality  under  which  it  is  sold. 

In  the  case  of  confectionery : 

If  it  contain  terra  alba,  barytes,  talc,  chrome  yellow,  or  other  mineral  sub- 
stance or  poisonous  color  or  flavor,  or  other  ingredient  deleterious  or  detri- 
mental to  health,  or  any  vinous,  malt,  or  spirituous  liquor  or  compound  or 
narcotic  drug. 

In  the  case  of  food: 

First.  If  any  substance  has  beeen  mixed  and  packed  with  it  so  as  to 
reduce  or  lower  or  injuriously  affect  its  quality  or  strength. 

Second.  If  any  substance  has  been  substituted  wholly  or  in  part  for 
the  article. 

Third.  If  any  valuable  constituent  of  the  article  has  been  wholly  or  in 
part  abstracted. 

Fourth.  If  it  be  mixed,  colored,  powdered,  coated,  or  stained  in  a  manner 
whereby  damage  or  inferiority  is  concealed. 


342  FEDERAL   AND   STATE   STATUTES. 

Fifth.  If  it  contain  any  added  poisonous  or  other  added  deleterious 
ingredient  which  may  render  such  article  injurious  to  health:  Provided* 
That  when  in  the  preparation  of  food  products  for  shipment  they  are  pre- 
served by  any  external  application  applied  in  such  manner  that  the  preserva- 
tive is  necessarily  removed  mechanically,  or  by  maceration  in  water,  or 
otherwise,  and  directions  for  the  removal  of  said  preservatives  shall  be 
printed  on  the  covering  or  the  package,  the  provisions  of  this  Act  shall  be 
construed  as  applying  only  when  said  products  are  ready  for  consumption. 

Sixth.  If  it  consists  in  whole  or  in  part  of  a  filthy,  decomposed,  or  putrid 
animal  or  vegetable  substance,  or  any  portion  of  an  animal  unfit  for  food, 
whether  manufactured  or  not,  or  if  it  is  the  product  of  a  diseased  animal, 
or  one  that  has  died  otherwise  than  by  slaughter. 

SEC.  8.  That  the  term  "misbranded,"  as  used  herein,  shall  apply  to  all 
drugs,  or  articles  of  food,  or  articles  which  enter  into  the  composition  of 
food,  the  package  or  label  of  which  shall  bear  any  statement,  design,  or 
device  regarding  such  article,  or  the  ingredients  or  substances  contained 
therein  which  shall  be  false  or  misleading  in  any  particular,  and  to  any  food 
or  drug  product  which  is  falsely  branded  as  to  the  State,  Territory,  or 
country  in  which  it  is  manufactured  or  produced. 

SEC.  9.  That  no  dealer  shall  be  prosecuted  under  the  provisions  of  this 
Act  when  he  can  establish  a  guaranty  signed  by  the  wholesaler,  jobber,  manu- 
facturer, or  other  party  residing  in  the  United  States,  from  whom  he  pur- 
chases such  articles,  to  the  effect  that  the  same  is  not  adulterated  or  mis- 
branded  within  the  meaning  of  this  Act,  designating  it.  Said  guaranty,  to 
afford  protection,  shall  contain  the  name  and  address  of  the  party  or 
parties  making  the  sale  of  such  articles  to  such  dealer,  and  in  such  case  said 
party  or  parties  shall  be  amenable  to  the  prosecutions,  fines,  and  other  penalties 
which  would  attach,  in  due  course,  to  the  dealer  under  the  provisions  of 
this  Act. 

Note.— On  May  29th,  1911,  the  Supreme  Court  decided  in  the  case  of  United 
States  v.  O.  A.  Johnson,  221  U.  S.  488,  that  false  and  misleading  statements 
in  the  labels  on  a  proprietary  medicine  as  to  its  curative  or  remedial  effects, 
which  did  not  import  any  statement  concerning  the  identity  or  ingredients 
of  the  medicine  are  not  "misbranded"  within  the  meaning  of  the  Food  and 
Drugs  Act,  which  defined  that  term  as  applicable  to  all  drugs  or  articles  of 
food,  the  package  or  label  of  which  shall  bear  any  statement,  design  or  device 
regarding  such  article,  ingredients  or  substance  contained  therein,  which  shall 
be  false  or  misleading  in  any  particular.  In  that  case,  O.  A.  Johnson  was 
indicted  for  delivering  for  shipment  from  Missouri  to  Washington,  District 
of  Columbia,  packages  and  bottles  of  medicine  bearing  labels  that  stated  or 
implied  that  the  contents  were  effective  in  curing  cancer;  the  District  Court 
quashed  the  indictment  and  its  action  in  this  regard  was  sustained  by  the 
Supreme  Court,  the  Court  holding  that  the  false  statements  meant  by  the 
Act,  according  to  its  plain  language,  were  false  statements  as  to  what  the 
ingredients  of  the  drug  were.  As  a  consequence  of  this  decision  the  Sherley 
Amendment  to  the  Pure  Food  and  Drugs  Act  was  passed  by  Congress  and 


FEDERAL  AND  STATE  STATUTES.          343 

approved  August  3rd,  1913,  which  provides  it  is  a  "misbranding"  in  the  case 
of  drugs : 

"If  its  package  or  label  shall  bear  or  contain  any  statement,  design,  or 
device  regarding  the  curative  or  therapeutic  effect  of  such  article  or  any  of 
the  ingredients  or  substances  contained  therein,  which  is  false  and  fraud- 
ulent." 

On  March  3rd,  1913,  the  Food  and  Drugs  Act  was  further  amended  by 
what  is  known  as  the  Gould  or  Net  Weight  Act  which  makes  it  a  violation 
of  the  act, 

"If  in  package  form,  the  quantity  of  contents  be  not  plainly  and  conspicu- 
ously marked  on  the  outside  of  the  package  in  terms  of  weight,  measure,  or 
numerical  count :  Provided,  however,  That  reasonable  variations  shall  be 
permitted,  and  tolerance  and  also  exemptions  as  to  small  packages  shall  be 
established  by  rules  and  regulations  made  in  accordance  with  the  provisions 
of  section  three  of  this  Act." 


Note. — On  February  24th,  1914,  the  Supreme  Court  decided  in  the  case  of 
United  States  v.  Lexington  Mill  and  Elevator  Company,  232  U.  S.  399,  that 
Section  7  of  the  Food  and  Drugs  Act,  relating  to  adulteration  of  food  and 
drugs,  was  not  violated  in  the  treatment  of  flour  by  the  "Alsop  Process," 
so-called,  by  which  nitrogen  peroxide  gas,  generated  by  electrcity,  was  mixed 
with  atmospheric  air  and  then  brought  in  contact  with  the  flour,  resulting  in 
the  bleaching  of  the  product.  The  government  contended  that  it  need  not 
prove  that  the  flour,  or  foodstuffs  made  by  the  use  of  It,  would  injure  the 
health  of  a  consumer,  but  only  that  the  added  substance  was  injurious.  The 
company  maintained  that  the  substances  introduced  in  the  flour  by  the  Alsop 
Process  in  the  proportion  of  1.8  parts  per  million  would  not  prove  injurious 
to  health.  The  court  said :  "The  testimony  shows  that  the  effect  of  the 
Alsop  Process  is  to  bleach  or  whiten  the  flour,  and  thus  make  it  more  market- 
able. If  the  testimony  introduced  on  the  part  of  the  respondent  was  believed 
by  the  jury,  they  must  necessarily  have  found  that  the  added  ingredient, 
nitrites  of  a  poisonous  character,  did  not  have  the  effect  to  make  the  con- 
sumption of  the  flour  by  any  possibility  injurious  to  the  health  of  the  con- 
sumer. The  statute  upon  its  face  shows  that  the  primary  purpose  of  Congress 
was  to  prevent  injury  to  the  public  health  by  the  sale  and  transportation  in 
interstate  commerce  of  misbranded  and  adulterated  foods.  The  legislation, 
as  against  misbranding,  intended  to  make  it  possible  that  the  consumer  should 
know  that  an  article  purchased  was  what  it  purported  to  be;  that  it  might 
be  bought  for  what  it  really  was,  and  not  upon  misrepresentations  as  to 
character  and  quality.  As  against  adulteration,  the  statute  was  intended  to 
protect  the  public  health  from  possible  injury  by  adding  to  articles  of  food 
consumption  poisonous  and  deleterious  substances  which  might  render  such 
articles  injurious  to  the  health  of  consumers.  If  this  purpose  has  been 
effected  by  plain  and  unambiguous  language,  and  the  act  is  within  the  power 
of  Congress,  the  only  duty  of  the  courts  is  to  give  it  effect  according  to 
its  terms.  *  *  *  *  Applying  these  well-known  principles  in  considering 
this  statute,  we  find  that  the  fifth  sub-division  of  $  7  provides  that  food  shall 
be  deemed  to  be  adulterated  'if  it  contain  any  added  poisonous  or  other 
added  deleterious  ingredient  which  may  render  such  article  injurious  to 
health'  The  instruction  of  the  trial  court  permitted  this  statute  to  be  read 


344          FEDERAL  AND  STATE  STATUTES. 

without  the  final  and  qualifying  words  concerning  the  effect  of  the  article 
upon  health.  If  Congress  had  so  intended,  the  provision  would  have  stopped 
with  the  condemnation  of  food  which  contained  any  added  poisonous  or  other 
added  deleterious  ingredient.  It  did  not  do  so,  but  only  condemned  food 
containing  an  added  poisonous  or  other  added  deleterious  ingredient  when 
such  addition  might  render  the  article  of  food  injurious  to  health." 


THE  MEAT  INSPECTION  ACT. 

Act  of  March  4,  1907. 

That  hereafter  for  the  purpose  of  preventing  the  use  in  interstate  or  foreign 
commerce  as  hereinafter  provided,  of  meat  and  meat  food  products  which 
are  unsound,  unhealthful,  unwholesome,  or  otherwise  unfit  for  human  food, 
the  Secretary  of  Agriculture,  at  his  discretion,  may  cause  to  be  made,  by 
inspectors  appointed  for  that  purpose,  an  examination  and  inspection  of  all 
cattle,  sheep,  swine,  and  goats  before  they  shall  be  allowed  to  enter  into 
any  slaughtering,  packing,  meat-canning,  rendering,  or  similar  establishment 
in  which  they  are  to  be  slaughtered  and  the  meat  and  meat  food  products 
thereof  are  to  be  used  in  interstate  or  foreign  commerce;  and  all  cattle, 
swine,  sheep  and  goats  found  on  such  inspection  to  show  symptoms  of 
disease  shall  be  set  apart  and  slaughtered  separately  from  all  other  cattle, 
sheep,  swine  or  goats,  and  when  so  slaughtered,  the  carcasses  of  said  cattle, 
sheep,  swine  or  goats  shall  be  subject  to  a  careful  examination  and  inspec- 
tion, all  as  provided  by  the  rules  and  regulations  to  be  prescribed  by 
the  Secretary  of  Argriculture,  as  herein  provided  for. 

That  for  the  purposes  hereinbefore  set  forth  the  Secretary  of  Agriculture 
shall  cause  to  be  made  by  inspectors  appointed  for  that  purpose,  as  herein- 
after provided,  a  post-mortem  examination  and  inspection  of  the  carcasses 
and  parts  thereof,  of  all  cattle,  swine,  sheep  and  goats  to  be  prepared  for 
human  consumption  at  any  slaughtering,  meat-canning,  salting,  packing,  ren- 
dering or  similar  establishment  in  any  State,  Territory  or  District  of  Colum- 
bia for  transportation  or  sale  as  articles  of  interstate  or  foreign  commerce, 
and  the  carcasses  and  parts  thereof  of  all  such  animals  found  to  be  sound, 
healthful,  wholesome,  and  fit  for  human  food  shall  be  marked,  stamped, 
tagged  or  labeled  as  "Inspected  and  Passed;"  and  said  inspectors  shall  label, 
mark,  stamp  or  tag  as  "Inspected  and  Condemned"  all  carcasses  and  parts 
thereof  of  animals  found  to  be  unsound,  unhealthful  and  unwholesome  or 
otherwise  unfit  for  human  food;  and  all  carcasses  and  parts  thereof  thus 
inspected  and  condemned  shall  be  destroyed  for  food  purposes  by 
the  said  establishment  in  the  presence  of  an  inspector,  and  the 
Secretary  of  Agriculture  may  remove  inspectors  from  any  such 
establishment  which  fails  to  so  destroy  any  such  condemned  carcass 
or  part  thereof,  and  said  inspectors  after  said  first  inspection  shall,  when 
they  deem  it  necessary,  reinspect  said  carcasses  or  parts  thereof  to  determine 
whether  since  the  first  inspection  the  same  have  become  unsound,  unhealthful, 
unwholesome  or  in  any  way  unfit  for  human  food,  and  if  any  carcass  or 
any  part  thereof  shall,  upon  examination  and  inspection  subsequent  to  the 


FEDERAL   AND   STATE   STATUTES.  345 

first  examination  and  inspection,  be  found  to  be  unsound,  unhealthful,  un- 
wholesome or  otherwise  unfit  for  food,  it  shall  be  destroyed  for  food 
purposes  by  the  said  establishment  in  the  presence  of  an  inspector. 

That  for  the  purposes  hereinbefore  set  forth  the  Secretary  of  Agriculture 
shall  cause  to  be  made  by  inspectors  appointed  for  that  purpose,  an  ex- 
amination and  inspection  of  all  meat  food  products  prepared  for  interstate 
or  foreign  commerce  in  any  slaughtering,  meat-canning,  salting,  packing, 
rendering  or  similar  establishment,  and  for  the  purposes  of  any  examination 
and  inspection  said  inspector  shall  have  access  at  all  times,  by  day  or  night, 
whether  the  establishment  be  operated  or  not,  to  every  part  of  said  estab- 
lishment; and  said  inspectors  shall  mark,  stamp,  tag  or  label  as  "Inspected 
and  Passed"  all  such  products  found  to  be  sound,  healthful  and  wholesome, 
and  which  contain  no  dyes,  chemicals,  preservatives  or  ingredients  which 
render  such  meat,  or  meat  food  products  unsound,  unhealthful,  unwhole- 
some and  unfit  for  human  food ;  and  said  inspector  shall  label,  mark,  stamp 
or  tag  as  "Inspected  and  Condemned"  all  such  products  found  unsound, 
unhealthful  and  unwholesome,  or  which  contain  dyes,  chemicals,  preserva- 
tives or  ingredients  which  render  such  meat,  or  meat  food  products  unsound, 
unhealthful,  unwholesome  or  unfit  for  human  food,  and  all  such  condemned 
meat  food  products  shall  be  destroyed  for  food  purposes  as  hereinbefore 
provided. 

The  Secretary  of  Agriculture  shall  cause  to  be  made  by  experts  in  sanita- 
tion, or  by  other  competent  inspectors,  such  inspection  of  all  slaughtering, 
meat-canning,  salting,  packing,  rendering  or  similar  establishments  in  which 
cattle,  sheep,  swine,  and  goats  are  slaughtered,  and  the  meat  and  meat  food 
products  thereof  are  prepared  for  interstate  or  foreign  commerce  as  may  be 
necessary  to  inform  himself  concerning  the  sanitary  conditions  of  the  same, 
and  to  prescribe  the  rules  and  regulations  of  sanitation  under  which  such 
establishment  shall  be  maintained;  and  where  the  sanitary  conditions  of  any 
such  establishment  are  such  that  the  meat  or  meat  food  product  are  rendered 
unclean,  unsound,  unhealthful,  unwholesome  or  otherwise  unfit  for  human 
food,  he  shall  refuse  to  allow  said  meat  or  meat  food  products  to  be  labeled, 
marked,  stamped,  or  tagged  as  "Inspected  and  Passed." 

That  on  and  after  October  1,  1907,  no  person,  firm  or  corporation  shall 
transport  or  offer  for  transportation,  and  no  carrier  of  interstate  or  foreign 
commerce  shall  transport  or  receive  for  transportation  from  one  State  or 
Territory,  or  the  District  of  Columbia  to  any  other  State  or  Territory  or 
the  District  of  Columbia,  or  to  any  place  under  the  jurisdiction  of  the  United 
States,  or  to  any  foreign  country,  any  carcasses  or  parts  thereof,  meat,  or 
meat  food  products  thereof,  which  have  not  been  inspected,  examined  and 
marked  as  "Inspected  and  Passed,"  in  accordance  with  the  terms  of  this 
Act. 

That  the  provisions  of  this  Act  requiring  an  inspection  to  be  made  by  the 
Secretary  of  Agriculture  shall  not  apply  to  animals  slaughtered  by  any 
farmer  on  the  farm  and  sold  and  transported  as  interstate  or  foreign  com- 
merce, nor  to  retail  butchers  and  retail  dealers  in  meat  and  meat  food 
products,  supplying  their  customers:  Provided,  that  if  any  person  shall 
sell  or  offer  for  sale  or  transportation  for  interstate  or  foreign  commerce 
any  meat,  or  meat  food  products  which  are  diseased,  unsound,  unhealthful. 


346          FEDERAL  AND  STATE  STATUTES. 

unwholesome,  or  otherwise  unfit  for  human  food,  knowing  that  such  meat 
food  products  are  intended  for  human  consumption,  he  shall  be  guilty  of 
a  misdemeanor,  and  on  conviction  thereof  shall  be  punished  by  a  fine  not 
exceeding  one  thousand  dollars,  or  by  imprisonment  for  a  period  of  not 
exceeding  one  year,  or  by  both  such  fine  and  imprisonment. 


THE  IMMIGRATION  LAW. 

Act  of  February  20,  1907,  as  amended  by  the  Act  of  March  26,  1910. 
AN  ACT  to  regulate  the  immigration  of  aliens  into  the  United  States. 

That  there  shall  be  levied,  collected,  and  paid  a  tax  of  four  dollars  for 
every  alien  entering  the  United  States.  The  said  tax  shall  be  paid  to  the 
collector  of  customs  of  the  port  or  customs  district  to  which  said  alien 
shall  come,  or,  if  there  be  no  collector  at  such  port  or  district,  then  to  the 
collector  nearest  thereto,  by  the  master,  agent,  owner,  or  consignee  of  the 
vessel,  transportation  line,  or  other  conveyance  or  vehicle  bringing  such  alien 
to  the  United  States. 

SEC  2.  That  the  following  classes  of  aliens  shall  be  excluded  from 
admission  into  the  United  States:  All  idiots,  imbeciles,  feeble-minded  per- 
sons, epileptics,  insane  persons,  and  persons  who  have  been  insane  within 
five  years  previous;  persons  who  have  had  two  or  more  attacks  of  insanity 
at  any  time  previously;  paupers;  persons  likely  to  become  a  public  charge; 
professional  beggars;  persons  afflicted  with  tuberculosis  or  with  a  loathsome 
or  dangerous  contagious  disease ;  persons  not  comprehended  within  any  of 
the.  foregoing  excluded  classes  who  are  found  to  be  and  are  certified  by 
the  examining  surgeon  as  being  mentally  or  physically  defective,  such 
mental  or  physical  defect  being  of  a  nature  which  may  affect  the  ability  of 
such  alien  to  earn  a  living;  persons  who  have  been  convicted  of  or  admit 
having  committed  a  felony  or  other  crime  or  misdemeanor  involving  moral 
turpitude;  polygamists,  or  persons  who  admit  their  belief  in  the  practice 
of  polygamy;  anarchists,  or  persons  who  believe  in.  or  advocate  the  over- 
throw by  force  or  violence  of  the  Government  of  the  United  States,  or  of 
all  government,  or  of  all  forms  of  law,  or  the  assassination  of  public  officials ; 
prostitutes,  or  women  or  girls  coming  into  the  United  States  for  the  purpose 
of  prostitution  or  for  any  other  immoral  purpose ;  persons  who  are  sup- 
ported by  or  receive  in  whole  or  in  part  the  proceeds  of  prostitution; 
persons  who  procure  or  attempt  to  bring  in  prostitutes  or  women  or  girls 
for  the  purpose  of  prostitution  or  for  any  other  immoral  purpose;  persons 
hereinafter  called  contract  laborers  who  have  been  induced  or  solicited  to 
migrate  to  this  country  by  offers  or  promises  of  employment  or  in  conse- 
quence of  agreements,  oral,  written  or  printed,  expressed  or  implied,  to  per- 
form labor  in  this  country  of  any  kind,  skilled  or  unskilled;  those  who  have 
been,  within  one  year  from  the  date  of  application  for  admission  to  the 
United  States,  deported  as  having  been  induced  or  solicited  to  migrate  as 
above  described;  any  person  whose  ticket  or  passage  is  paid  for  with  the 
money  of  another,  or  who  is  assisted  by  others  to  come,  unless  it  is  affirma- 
tively and  satisfactorily  shown  that  such  person  does  not  belong  to  one  of 


FEDERAL  AND  STATE  STATUTES.         347 

the  foregoing  excluded  classes  and  that  said  ticket  or  passage  was  not  paid 
for  by  any  corporation,  association,  society,  municipality,  or  foreign  gov- 
ernment, either  directly  or  indirectly;  all  children  under  sixteen  years  of 
age  unaccompanied  by  one  or  both  of  their  parents,  at  the  discretion  of 
the  Secretary  of  Commerce  and  Labor  or  under  such  regulations  as  he  may 
from  time  to  time  prescribe:  Provided,  That  nothing  in  this  Act  shall 
exclude,  if  otherwise  admissible,  persons  convicted  of  an  offense  purely 
political,  not  involving  moral  turpitude:  Provided  further,  That  the  pro- 
visions of  this  section  relating  to  the  payments  for  tickets  or  passage  by  any 
corporation,  association,  society,  municipality,  or  foreign  government  shall 
not  apply  to  the  tickets  or  passage  of  aliens  in  immediate  and  continuous 
transit  through  the  United  States  to  foreign  contiguous  territory :  And 
provided  further,  That  skilled  labor  may  be  imported  if  labor  of  like  kind 
unemployed  cannot  be  found  in  this  country:  And  provided  further,  That 
the  provisions  of  this  law  applicable  to  contract  labor  shall  not  be  held  to 
exclude  professional  actors,  artists,  lecturers,  singers,  ministers  of  any 
religious  denomination,  professors  for  colleges  or  seminaries,  persons  be- 
longing to  any  recognized  learned  profession,  or  persons  employed  strictly 
as  personal  or  domestic  servants. 

SEC.'  3.  That  the  importation  into  the  United  States  of  any  alien  for  the 
purpose  of  prostitution  or  for  any  other  immoral  purpose  is  hereby  for- 
bidden; and  whoever  shall,  directly  or  indirectly,  import,  or  attempt  to 
import,  into  the  United  States,  any  alien  for  the  purpose  of  prostitution  or 
for  any  other  immoral  purpose,  or  whoever  shall  hold  or  attempt  to  hold 
any  alien  for  any  such  purpose  in  pursuance  of  such  illegal  importation,  or 
whoever  shall  keep,  maintain,  control,  support,  employ,  or  harbor  in  any 
house  or  other  place,  for  the  purpose  of  prostitution  or  for  any  other  im- 
moral purpose,  in  pursuance  of  such  illegal  importation,  any  alien,  shall, 
in  every  such  case  be  deemed  guilty  of  a  felony,  and  on  conviction  thereof 
be  imprisoned  not  more  than  ten  years  and  pay  a  fine  of  not  more  than  five 
thousand  dollars.  *  *  *  * 

SEC.  4.  That  it  shall  be  a  misdemeanor  for  any  person,  company,  partner- 
ship, or  corporation,  in  any  manner  whatsoever,  to  prepay  the  transportation 
or  in  any  way  to  assist  or  encourage  the  importation  or  migration  of  any 
contract  laborer  or  contract  laborers  into  the  United  States,  unless  such 
contract  laborer  or  contract  laborers  are  exempted  under  the  terms  of  the 
last  two  provisos  contained  in  section  two  of  this  Act. 

SEC.  6.  That  it  shall  be  unlawful  and  be  deemed  a  violation  of  section 
four  of  this  Act  to  assist  or  encourage  the  importation  or  migration  of  any 
alien  by  promise  of  employment  through  advertisements  printed  and  pub- 
lished in  any  foreign  country;  and  any  alien  coming  to  this  country  in 
consequence  of  such  an  advertisement  shall  be  treated  as  coming  under 
promise  or  agreement  as  contemplated  in  section  two  of  this  Act.  *  *  *  * 

SEC.  12.  That  upon  the  arrival  of  any  alien  by  water  at  any  port  within 
the  United  States  it  shall  be  the  duty  of  the  master  or  commanding  officer 
of  the  steamer,  sailing  or  other  vessel  having  said  alien  on  board  to  deliver 


348  FEDERAL   AND   STATE   STATUTES. 

to  the  immigration  officers  at  the  port  of  arrival  lists  or  manifests  made  at 
the  time  and  place  of  embarkation  of  such  alien  on  board  such  steamer  or 
vessel,  which  shall,  in  answer  to  questions  at  the  top  of  said  list,  state  as  to 
each  alien  the  full  name,  age,  and  sex;  whether  married  or  single;  the  calling 
or  occupation;  whether  able  to  read  or  write;  the  nationality;  the  race;  the 
last  residence;  the  name  and  address  of  the  nearest  relative  in  the  country 
from  which  the  alien  came;  the  seaport  for  landing  in  the  United  States; 
the  final  destination,  if  any,  beyond  the  port  of  landing;  whether  having  a 
ticket  through  to  such  final  destination;  whether  the  alien  has  paid  his  own 
passage  or  whether  it  has  been  paid  by  any  other  person  or  by  any  corpora- 
tion, society,  municipality,  or  government,  and  if  so,  by  whom ;  whether  in 
possession  of  fifty  dollars,  and  if  less,  how  much;  whether  going  to  join 
a  relative  or  friend,  and  if  so,  what  relative  or  friend,  and  his  or  her  name 
and  complete  address;  whether  ever  before  in  the  United  States,  and  if  so 
when  and  where;  whether  ever  in  prison  or  almshouse  or  an  institution  or 
hospital  for  the  care  and  treatment  of  the  insane  or  supported  by  charity; 
whether  a  polygamist;  whether  an  anarchist;  whether  coming  by  reason  of 
any  offer,   solicitation,  promise,  or  agreement,   express  or   implied,   to  per- 
form labor  in  the  United  States,  and  what  is  the  alien's  condition  of  health, 
mental  and  physical,  and  whether  deformed  or  crippled,  and  if  so,  for  how 
long  and  from  what  cause ;  that  it  shall  further  be  the  duty  of  the  master 
or  commanding  officer  of  every  vessel  taking  alien  passengers  out  of  the 
United  States,  from  any  port  thereof,  to  file  before  departure  therefrom  with 
the   collector  of  customs   of   such   port   a  complete   list   of   all   such   alien 
passengers   taken   on   board.     Such   list   shall   contain   the   name,    age,   sex, 
nationality,  residence  in  the  United  States,  occupation,  and  the  time  of  last 
arrival  of  every  such  alien  in  the  United  States,  and  no  master  of  any  such 
vessel  shall  be  granted  clearance  papers  for  his  vessel  until  he  has  deposited 
such  list  or  lists  with  the  collector  of  customs  at  the  port  of  departure  and 
made  oath  that  they  are  full  and  complete  as  to  the  name  and  other  in- 
formation herein  required  concerning  each  alien  taken  on  board  his  vessel; 
and  any  neglect  or  omission  to  comply  with  the  requirements  of  this  section 
shall   be  punishable   as  provided   in   section   fifteen   of  this   Act.     That  the 
collector  of  customs  with  whom  any  such  list  has  been  deposited  in  accord- 
ance with  the  provisions  of  this   section,   shall   promptly  notify  the   Com- 
missioner-General of  Immigration  that  such  list  has  been  deposited  with  him 
as   provided,   and   shall   make  such    further   disposition   thereof   as   may  be 
required  by  regulations  to  be  issued  by  the  Commissioner-General  of  Immi- 
gration with  the  approval  of  the  Secretary  of  Commerce  and  Labor :     Pro- 
vided,  That  in  the  case  of  vessels   making   regular   trips   to   ports   of   the 
United  States  the  Commissioner-General  of  Immigration,  with  the  approval 
of  the  Secretary  of   Commerce  and   Labor,  may,  when   expedient,   arrange 
for  the  delivery  of  such  lists  of  outgoing  aliens  at  a  later  date:     Provided 
further,  That  it  shall  be  the  duty  of  the  master  or  commanding  officer  of 
any  vessel  sailing  from  ports  in  the  Philippine  Islands,  Guam,  Porto  Rico,  or 
Hawaii  to  any  port  of  the  United  States  on  the  North  American  Continent 
to  deliver  to  the  immigration  officers  at  the  port  of  arrival  lists  or  manifests 
made  at  the  time  and  place  of  embarkation,  giving  the  names  of  all  aliens  on 
board  said  vessel. 


FEDERAL  AND  STATE  STATUTES.         349 

SEC.  19.  That  all  aliens  brought  to  this  country  in  violation  of  law  shall, 
if  practicable,  be  immediately  sent  back  to  the  country  whence  they  re- 
spectively came  on  the  vessels  bringing  them.  The  cost  of  their  main- 
tenance while  on  land,  as  well  as  the  expense  of  the  return  of  such  aliens, 
shall  be  borne  by  the  owner  or  owners  of  the  vessels  on  which  they 
respectively  came;  and  if  any  master,  person  in  charge,  agent,  owner,  or 
consignee  of  any  such  vessel  shall  refuse  to  receive  back  on  board  thereof, 
or  on  board  of  any  other  vessel  owned  or  operated  by  the  same  interests, 
such  aliens,  or  shall  fail  to  detain  them  thereon,  or  shall  refuse  or  fail  to 
return  them  to  the  foreign  port  from  which  they  came,  or  to  pay  the  cost 
of  their  maintenance  while  on  land,  or  shall  make  any  charge  for  the 
return  of  any  such  alien,  or  shall  take  any  security  from  him  for  the  pay- 
ment of  such  charge,  such  master,  person  in  charge,  agent,  owner,  or  con- 
signee shall  be  deemed  guilty  of  a  misdemeanor  and  shall,  on  conviction,  be 
punished  by  a  fine  of  not  less  than  three  hundred  dollars  for  each  and 
every  offense;  and  no  vessel  shall  have  clearance  from  any  port  of  the 
United  States  while  any  such  fine  is  unpaid. 

SEC.  20.  That  any  alien  who  shall  enter  the  United  States  in  violation  of 
law,  and  such  as  become  public  charges  from  causes  existing  prior  to  landing, 
shall,  upon  the  warrant  of  the  Secretary  of  Commerce  and  Labor,  be  taken 
into  custody  and  deported  to  the  country  whence  he  came  at  any  time  within 
three  years  after  the  date  of  his  entry  into  the  United  States.  Such  deporta- 
tion, including  one-half  of  the  entire  cost  of  removal  to  the  port  of 
deportation,  shall  be  at  the  expense  of  the  contractor,  procurer,  or  other 
person  by  whom  the  alien  was  unlawfully  induced  to  enter  the  United  States, 
or,  if  that  cannot  be  done,  then  the  cost  of  removal  to  the  port  of  deportation 
shall  be  at  the  expense  of  the  "immigrant  fund"  provided  for  in  section  one 
of  this  Act,  and  the  deportation  from  such  port  shall  be  at  the  expense  of 
the  owner  or  owners  of  such  vessel  or  transportation  line  by  which  such 
aliens  respectively  came. 


THE   NEW   FEDERAL   JUDICIAL   CODE. 

Enacted  March  3,  1911.     Effective  on  January  1,  1912. 

(Note. — It  is  impossible  within  limited  space  to  set  forth  more  than  the 
organization  and  principal  powers  of  the  Federal  Courts.) 

I.    DISTRICT  COURTS. 

The  United  States  is  divided  into  seventy-eight  judicial  districts,  the  number 
of  districts  in  each  State  varying  from  one  to  four.  In  each  of  the  districts 
there  is  a  district  court,  presided  over  by  a  District  Judge.  In  several  of 
the  districts  there  is  provision  for  an  additional  District  Judge.  Every 
District  Judge  is  required  to  reside  in  the  district  for  which  he  is  appointed. 
His  salary  is  six  thousand  dollars  per  year,  and  he  holds  his  office  during 
good  behavior. 


350         FEDERAL  AND  STATE  STATUTES. 

The  District  Courts  have  original  jurisdiction: 

(1)  Of  all  suits,  of  a  civil  nature,  at  law  or  in  equity  brought  by  the 
United  States,  or  by  any  officer  thereof,  or  between  citizens  of  the  same 
State   claiming   lands   under    grants    from    different    States;    or   where    the 
matter  in  controversary  exceeds  three  thousand  dollars  and  arises  (1)  under 
the  Constitution  or  laws  or  treaties  of  the  United  States;    (2)   or  between 
citizens  of  different  States,  or  (3)   between  citizens  of  a  State  and  foreign 
States,  citizens  or  subjects. 

(2)  Of  all  crimes   and  offenses   cognizable  under  the   authority   of   the 
United  States. 

(3)  Of  all  civil  cases  of  admiralty  and  maritime  jurisdiction. 

(4)  Of  all  cases  arising  under  the  postal  laws. 

(5)  Of  all  suits  at  law  or  in  equity  arising  under  the  patent,  the  copyright 
and  the  trade-mark  laws. 

(6)  Of  all  proceedings  in  bankruptcy. 

(7)  Of  all  suits  and  proceedings  arising  under  any  law  to  protect  trade 
and  commerce  against  restraints  and  monopolies. 

(8)  Of  all  proceedings  arising  under  any  law  regulating  the  immigration 
of  aliens,  or  under  the  contract  labor  law. 

II.  CIRCUIT  COURTS  OF  APPEALS. 

There  are  nine  judicial  circuits  of  the  United  States,  in  each  of  which  is 
a  Circuit  Court  of  Appeals,  composed  of  three  Judges.  A  judicial  circuit 
embraces  from  three  to  twelve  States.  Several  of  the  circuits  have  addi- 
tional Circuit  Judges.  Each  Circuit  Judge  receives  a  salary  of  seven  thou- 
sand dollars  per  annum,  and  is  required  to  reside  within  his  circuit.  He 
holds  office  during  good  behavior.  The  Chief  Justice  and  Associate  Justices 
of  the  Supreme  Court  are  allotted  among  the  circuits  and  are  competent 
to  sit  as  Judges  of  the  Circuit  Court  of  Appeals  within  their  respective 
circuits. 

The  Circuit  Courts  of  Appeals  exercise  appellate  jurisdiction  to  review 
by  appeal  or  writ  of  error  final  decisions  in  the  district  courts,  including 
the  United  States  District  Court  for  Hawaii,  in  all  cases  other  than  those 
in  which  appeals  and  writs  of  error  may  be  taken  direct  to  the  Supreme 
Court. 

III.  THE  COURT  OF  CLAIMS. 

The  Court  of  Claims  consists  of  a  Chief  Justice  and  four  Judges,  who 
hold  office  during  good  behavior.  The  salary  of  each  Justice  is  six  thousand 
dollars  per  annum,  the  Chief  Justice  receiving  six  thousand  five  hundred 
dollars.  It  holds  an  annual  session  at  the  City  of  Washington,  beginning 
the  first  Monday  in  December  and  continuing  as  long  as  may  be  necessary. 
The  Court  has  jurisdiction  to  hear  and  determine  all  claims  (except  for 
pensions)  founded  upon  the  Constitution  of  the  United  States,  or  any  law 


FEDERAL  AND  STATE  STATUTES.          351 

of  Congress,  upon  any  regulation  of  an  Executive  Department,  upon  any 
contract  with  the  Government  of  the  United  States,  or  for  damages  in 
cases  not  sounding  in  tort  in  respect  of  which  a  party  would  be  entitled 
to  redress  against  the  United  States,  either  in  a  court  of  law,  equity,  or 
admiralty  if  the  United  States  were  suable. 

IV.  THE  COURT  OF  CUSTOMS  APPEALS. 

The  Court  of  Customs  Appeals  consists  of  a  Presiding  Judge  and  four 
Associate  Judges,  who  receive  a  salary  of  seven  thousand  dollars  a  year  each. 
The  President  of  the  United  States  may,  in  case  of  a  vacancy,  inability  or 
disqualification  of  one  or  two  Judges,  designate  any  United  States  Circuit 
or  District  Judge  to  act  in  his  or  their  place. 

This  court  exercises  exclusive  appellate  jurisdiction  to  review  by  appeal 
final  decisions  by  a  Board  of  General  Appraisers  in  all  cases  as  to  the  con- 
struction of  the  law  and  the  facts  respecting  the  classification  of  merchandise 
and  the  rate  of  duty  imposed  thereon  under  such  classification,  and  the  fees 
and  charges  connected  therewith,  and  all  appealable  questions  as  to  the 
jurisdiction  of  said  board,  and  all  appealable  questions  as  to  the  laws  and 
regulations  governing  the  collection  of  the  customs  revenues;  and  the  judg- 
ment and  decrees  of  this  court  are  final  in  all  such  cases. 

V.  THE  SUPREME  COURT. 

The  Supreme  Court  of  the  United  States  consists  of  a  Chief  Justice  and 
eight  Associate  Justices.  The  Chief  Justice  receives  a  salary  of  fifteen 
thousand  dollars  a  year,  and  each  Associate  Justice  a  salary  of  fourteen 
thousand  five  hundred  dollars.  They  hold  office  during  good  behavior.  The 
Supreme  Court  holds  one  term  annually  at  the  seat  of  government,  com- 
mencing on  the  second  Monday  of  October,  and  such  adjourned  or  special 
terms  as  it  may  find  necessary.  The  jurisdiction  is  exclusive  as  to  all  con- 
troversies of  a  civil  nature  where  a  State  is  a  party,  and  as  to  all  suits  or 
proceedings  against  ambassadors,  public  ministers,  or  their  domestics  or 
domestic  servants ;  and  original,  but  not  exclusive  jurisdiction,  of  all  suits 
brought  by  abmassadors,  other  public  ministers  or  in  which  a  consul  or  vice 
consul  is  a  party.  It  has  power  to  issue  writs  of  mandamus  to  any  courts 
appointed  under  the  authority  of  the  United  States,  or  to  persons  holding 
office  under  the  authority  of  the  United  States,  where  a  State  or  an  am- 
bassador, or  other  public  minister,  or  a  consul,  or  vice  consul  is  a  party.  A 
final  judgment  or  decree  in  any  suit  in  the  highest  court  of  a  State  may  be 
re-examined,  and  reversed  or  affirmed  in  the  Supreme  Court  upon  a  writ  of 
error,  where  there  is  drawn  in  question  the  validity  of  a  treaty,  or  statute 
of  or  an  authority  exercised  under  the  United  States,  or  the  validity  of  a 
statute  or  an  authority  exercised  under  any  State  on  the  ground  of  their 
being  repugnant  to  the  Constitution,  treaties  or  laws  of  the  United  States,  or 
where  any  title,  right,  privilege,  or  immunity  is  claimed  under  the  Consti- 
tution, treaties,  or  statutes  of  the  United  States.  Such  judgment  shall  have 
the  same  effect  as  if  the  case  had  originated  in  a  court  of  the  United  States. 
Appeals  may  be  taken  direct  to  the  Supreme  Court  from  the  district  courts 
in  any  case  involving  the  construction  and  application  of  the  Constitution, 


352         FEDERAL  AND  STATE  STATUTES. 

or  the  constitutionality  of  any  law  of  the  United  States,  or  the  validity  or 
construction  of  any  treaty,  and  in  any  case  in  which  the  Constitution  or  law 
of  a  State  is  claimed  to  be  in  contravention  of  the  Constitution  of  the  United 
States.  The  Circuit  Court  of  Appeals  may  certify  to  the  Supreme  Court  any 
questions  or  propositions  of  law  concerning  which  it  desires  the  instruction 
of  that  court  for  its  proper  decision,  and  in  any  case,  civil  or  criminal  in 
which  the  decree  of  the  Circuit  Court  of  Appeals  is  final,  the  Supreme  Court 
may  require  the  case  to  be  certified  to  it  for  review.  In  all  cases  where  the 
decree  or  judgement  of  the  Circuit  Court  of  Appeals  is  not  made  final  under 
the  provisions  of  this  law,  there  shall  be  of  right  an  appeal  or  writ  of  error 
to  the  Supreme  Court  where  the  matter  in  controversy  shall  exceed  one 
thousand  dollars.  The  right  of  appeal  or  writ  of  error  to  the  Supreme  Court 
extends  also  to  the  courts  of  Porto  Rico,  Hawaii,  Alaska,  the  Philippine 
Islands  and  the  District  of  Columbia. 

Under  Section  289  of  the  Code,  it  was  provided  that  the  Circuit  Courts  of 
the  United  States  should  be  abolished  upon  the  taking  effect  of  the  Act,  and 
their  records,  journals,  files,  dockets,  books  and  papers  should  be  delivered 
to  the  district  courts.  All  cases  pending  in  the  Circuit  Courts  were  to  be 
proceeded  with  in  the  district  courts. 


ANALYSIS-  OF  FEDERAL  INCOME  TAX  LAW.* 

Approved  October  3,  1913. 

A.  THOSE  WHO  ARE  TAXED. 

1.  Every  citizen  of  the  United  States  (at  home  or  abroad). 

2.  Every  person  residing  in  the  United  States,  though  not  a  citizen. 

3.  Incomes  from  property  owned,  and  business,  trade,  or  profession  car- 
ried on  in  the  United  States  by  persons  residing  elsewhere. 

4.  Corporations,  joint  stock  companies,  or  associations,  and  every  insur- 
ance company,  no  matter  how  created  or  organized. 

5.  Income  from  business  transacted  and  capital  invested  within  the  United 
States  by  foreign  companies. 

B.  AMOUNT   OF    PERSONAL    TAX. 
(Normal  tax.) 

One  per  centum  per  annum,  on  net  income  of  every  individual. 
(Sur-tax.) 

Plus  1  per  cent,  on  that  part  of  income  between  $20,000  and  $50,000. 
Plus  2  per  cent,  on  that  part  of  income  between  $50,000  and  $75,000. 
Plus  3  per  cent,  on  that  part  of  income  between  $75,000  and  $100,000. 
Plus  4  per  cent,  on  that  part  of  income  between  $100,000  and  $250,000. 
Plus  5  per  cent,  on  that  part  of  income  between  $250,000  and  $500,000. 
Plus  6  per  cent,  on  that  part  of  income  exceeding  $500,000. 


FEDERAL   AND   STATE   STATUTES.  353 

C    INCOME  TO  INCLUDE. 

Net  income  of  a  taxable  person  to  include  gains,  profits  and  income  derived 
from — 

1.  Salaries,  wages,  or  compensations  for  personal  service. 

2.  Professions,  vocations,  business,  trade,  commerce. 

3.  Sales  or  dealings  in  property,  whether  real  or  personal. 

4.  Interest,  rent,  dividends,  securities,  including  income  from  but  not  the 
value  of  property  acquired  by  gift,  bequest,  devise,  or  descent. 

(a)  Does    not    include   proceeds   of   life    insurance    policies,    paid   upon 
maturity  or  upon  death  of  insured. 

(b)  Corporations  not  permitted  to   accumulate  undue   surplus   in  order 
to  decrease  income  of  an  individual  that  he  may  escape  payment  of  surtax 
(regulated  by  Commissioner  of  Internal  Revenue). 

D.    EXEMPTED  FROM  THE  TAX. 

1.  Necessary   expenses    actually   paid    in    carrying   on    any   business,   not 
including  personal,  living,  or  family  expenses. 

2.  All  interest  paid  within  the  year  by  a  taxable  person  on  indebtedness. 

3.  All   national,   State,   county,   school   and  municipal   taxes  paid   within 
the  year,  not  including  those  assessed  against  local  benefits. 

4.  Losses  actually  sustained  during  the  year,  incurred  in  trade  or  arising 
from  fires,  storms,  or  shipwreck,  and  not  compensated  for  by  insurance  or 
otherwise. 

5.  Debts  due  to  the  taxpayer  actually  ascertained  to  be  worthless  and 
charged   off   during  the  year. 

6.  Reasonable  allowance   for  the  exhaustion,  wear  and  tear  of  property 
arising  out  of  its  use  or  employment  in  business. 

(a)  In  case  of  mines,  not  to  exceed  5  per  cent,  of  the  gross  value  at  the 
mine  of  the  output  for  the  year  for  which  the  computation  is  made. 

(b)  No  deduction  for  expense  of  restoring  property  for  which  an  allow- 
ance is  or  has  been  made  under  this  item. 

(c)  No  deductions  allowed  for  any  amount  paid  for  new  buildings,  perma- 
nent improvements,  or  betterments. 

7.  Amounts  received  as  dividends  upon  the  stock  or  from  the  net  earnings 
of  any  corporation,  joint  stock  company,  association  or  insurance  company 
which  is  taxable  upon  its  net  income  under  this  Act. 

8.  Amount  of  income,  the  tax  upon  which  has  been  paid  or  withheld  from 
payment  at  the  source  as  provided  under  this  Act. 

(a)     If  not  exceeding  $3,000  per  annum,  if  indefinite  or  irregular  as  to 
amount  or  time  of  accrual,  not  to  be  deducted  in  personal  return. 

9.  Interest  upon  obligations  of  a  State  or  any  political  sub-division  thereof,, 
and  upon  the  obligations  of  the  United  States  or  its  possessions. 


354  FEDERAL   AND   STATE   STATUTES. 

10.  Salary  of  the  present  President  of  the  United  States  during  the  term 
for  which  he  has  been  elected,  and  of  the  Judges  of  the  Supreme  and  in- 
ferior Courts  of  the  United  States  now  in  office,  and  the  compensation  of  all 
officers  and  employes  of  a  State  or  any  political  sub-division  thereof. 

(a)     Except  when  such  compensation  is  paid  by  the  United  States  Gov- 
ernment. 

E.  EXEMPTIONS  TO  PERSONAL  INCOMES. 

1.  Three  thousand  dollars  per  annum  of  each  income. 

2.  Plus  $1,000  if  the  man    (or  woman)    is  married  and  living  with  his 
(or  her)  wife  (or  husband). 

Note. — Only  one  deduction  of  $4,000  shall  be  made  from  the  aggregate 
income  of  both  husband  and  wife  living  together. 

F.  DATE  FOR  MAKING  RETURN,  ETC. 

1.  Tax  to  be  levied  upon  income  accruing  each  preceding  calendar  year 
ending  December  31. 

(a)     For  1913,  only  from  March  1,  during  which  part  year  only  five-sixths 
of  deductions  are  allowed. 

2.  Every  person  of  lawful  age  having  income  of  more  than  $3,000  per 
annum  to  make  return  on  March  1  (beginning  March  1,  1914)  of  each  year 
to  the  Collector  of  Internal  Revenue  upon  a  form,  prescribed  by  the  Com- 
missioner   of    Internal    Revenue    with    approval    of    the    Secretary    of    the 
Treasury. 

(a)  Guardians,    trustees,    all    persons,    corporations,    etc.,    acting    in    any 
fiduciary  capacity  shall  make  return  for  persons  for  whom  they  act. 

I.    Return  made  by  one  of  two  or  more  such  guardians,  etc.,   shall  be 
sufficient. 

11.  Corporations,  etc.,  having  disposal  of  dividends,  etc.,   shall  withhold 
tax  and  make  return  for  each  individual. 

Note  1. — No.  tax  to  be  withheld  at  source  prior  to  November  1,  1913. 
Note  2. — No  return  of  income,  not  exceeding  $3,000  per  annum,  required. 

Note   3. — In   case   of    partnerships   only    individual   held    accountable    for 
return. 

Note  4. — No  individual  required  to  make  return  of  his  income  taxed  at 
source. 

(b)  Collectors  may  question  verity  of  return.    Appeal  given  to  Commis- 
sioner of  Internal  Revenue. 

3.  Commissioner  of  Internal  Revenue  to  notify  the  taxed  person  by  June 
1  of  the  amount  of  tax  for  which  he  or  she  is  liable. 

(a)     Fraudulent    returns   and   over-taxation   may   be   corrected    any   time 
within  three  years. 


FEDERAL  AND  STATE  STATUTES.         355 

4.     Tax  to  be  paid  to  the  Government  by  June  30th. 

(a)  Add  to  tax  unpaid  after  ten  days,  5  per  cent,  and   1  per  cent,  per 
month  thereafter  until  paid.     (Except  from  estates  of  insane,  deceased,  or 
insolvent  persons.) 

(b)  Tax  on  incomes  taxed  at  source  to  be  paid  by  corporation,  etc.,  with- 
holding the  tax. 

I.  Persons  making  claims  of  exemptions  must  file  a  statement  with  the 
corporation  withholding  tax  thirty  days  prior  to  day  on  which  return  of  his 
income  is  due.     (Penalty  of  $300  for  making  false  claim.) 

II.  Persons,  firm,  etc.,  making  business  of  collecting  interest  of  dividends 
by  means  of  coupons,  checks,  or  bills  of  exchange  shall  obtain  license  from 
the  Commissioner  of  Internal  Revenue.     Not  having  such  a  license  is  a  mis- 
demeanor punishable  by  a  fine  not  exceeding  $5,000,  or  imprisonment  not 
exceeding  one  year,  or  both. 

III.  Provisions  relating  .to  taxing  at  source  apply  only  to  the  normal  tax. 

G.    PENALTIES. 

1.  For  refusal  or  neglect  to  make  return  there  is  a  penalty  of  not  less 
than  $20  nor  more  than  $1,000. 

2.  A  false  or  fraudulent  return  with  intent  to  evade  the  law  is  held  to  be 
a  misdemeanor  punishable  by  a  fine  not  exceeding  $2,000,  or  imprisonment 
exceeding  one  year,  or  both. 

3.  For   a  corporation,   etc.,  to   refuse  or   neglect  to   make   return   or  to 
make  a  false  return  there  is  a  penalty  not  exceeding  $10,000. 

H.    THE  CORPORATION  TAX. 

Normal  tax  of  1  per  cent,  on  entire  net  income  accruing  from  all  sources 
to  every  corporation,  joint-stock  company,  or  association,  and  every  insurance 
company,  and  upon  income  from  business  transacted  and  capital  invested  in 
the  United  States  by  foreign  corporations.  This  classification  excludes : 

1.  Partnerships. 

2.  Labor,  agricultural,  or  horticultural  organizations. 

3.  Mutual  savings  banks  not  having  a  capital  stock  represented  by  shares. 

4.  Fraternal  beneficiary  societies,  orders  or  associations. 

5.  Domestic  building  and  loan  associations. 

6.  Cemetery  companies  operated  on  the  mutual  plan. 

7.  Religious,  charitable,  scientific  or  educational  organizations. 

8.  Business  leagues,  chambers  of  commerce,  boards  of  trade,  civic  leagues. 

9.  Incomes  from  public  utilities  accruing  to  a  State  or  a  political  sub- 
division thereof. 


356  FEDERAL  AND   STATE   STATUTES. 

I.    NET  INCOME  OF  CORPORATIONS. 

Net  income  of  a  corporation  is  to  be  derived  by  deducting  from  the  gross 
income  the  following  items: 

1.  Necessary  expenses  paid  in  maintenance  of  business,  including  rentals. 

2.  Losses  not  compensated  for  by  insurance  or  otherwise,  and  a  reason- 
able allowance  for  depreciation. 

(a)  In  case  of  mines  the  allowance  for  ore  depreciation  not  to  exceed  5 
per  centum  of  gross  value  at  the  mine  of  the  output  for  the  year  for  which 
the  computation  is  made. 

(b)  In  case  of  insurance  companies  this  includes  net  addition  required  by 
law  to  be  made  to  reserve  funds,  and  sums,  other  than  dividends,  paid  within 
the  year  on  policy  and  annuity  contracts;   Provided 

I.  Mutual   fire   insurance  companies  not  required  to   return   as  part   of 
income  any  portion  of  premium  deposits  returned  to  policyholders,  payments 
for  losses,  expenses  and  reinsurance. 

II.  Mutual  marine  insurance  companies  may  deduct  from  incomes  amounts 
paid    for   reinsurance   and   amounts   paid   to   policyholders    on    account   of 
premiums  previously  paid  by  them   and  interest  paid  upon   such   amounts 
between  the  ascertainment  thereof  and  the  payment  thereof. 

III.  Life  insurance  companies  not  to  include  as  income  that  portion  of 
actual  premium  received  which  is  paid  back  or  credited  to  a  policyholder. 

3.  Interest  on  indebtedness,  not  exceeding  one-half  of  its  bonded  indebted- 
ness and  its  paid-up  capital  stock  outstanding. 

(a)  In  case  of  indebtedness  secured  by  collateral,  the  total  interest  paid 
may  be  deducted  as  a  part  of  its  expense  of  doing  business. 

(b)  In  case  of  bonds,  etc.,  interest  on  which  is  guaranteed  to  be  free  of 
taxation,  no  deduction  for  the  payment  of  the  tax  herein  imposed  shall  be 
allowed. 

(c)  In  case  of  bank  or  other  financial  institution  this  will  include  interest 
paid  on  deposits,  etc. 

4.  All  taxes  imposed  by  the  United  States,  or  any  State  or  Territory,  or 
by  the  government  of  any  foreign  country. 

(a)     Deductions  from  gross  domestic  income  of  foreign  companies  to  be 
computed  in  the  same  manner  as  for  domestic  companies. 

J.    DATE  FOR  CORPORATE  RETURN,  ETC. 

1.     Tax  imposed  for  fiscal  year  ending  December  31   (for  1913  only  from 
March  1,  during  which  year  only  five-sixths  of  income  to  be  taxed). 

(a)     Any  corporation,  etc.,  may  choose  the  end  of  any  month  for  closing 
its  fiscal  year. 

1.  In  which  case  notice  should  be  given  the  collector  thirty  days  prior. 
II.     Return  to  be  made  60  days  after  the  close  of  such  fiscal  year. 

2.  Return  to  be  made  under  oath  of  the  president  or  proper  official  of  the 


FEDERAL  AND  STATE  STATUTES.          357 

company,  etc.,  to  Collector  of  Internal  Revenue  on  March  1  each  year,  except 
as  noted  in  (a)  of  the  preceding  paragraph.    Such  return  to  show— 

(a)  Capital  stock. 

(b)  Bonded  and  other  indebtedness. 

(c)  Gross  income. 

(d)  Necessary  expenses. 

(e)  All  losses. 

(f)  Interest  paid  on  bonded  indebtedness. 

(g)  Taxes. 

(h)     Net  income. 

These  returns  are  public  records,  open  to  inspection  only  upon  order  of 
the  President. 

3.  Assessments  made  and  corporations,  etc.,  notified  by  June   1  of  the 
amount  of  tax  required  to  be  paid. 

(a)     Fraudulent  return  or  overtaxation  to  be  corrected  within  three  years. 

4.  Tax  to  be  paid  by  June  30  of  each  year  (or  120  days  from  date  on 
which  return  is  required  to  be  made). 

(a)  If  tax  is  not  paid  upon  date  due  there  will  be  assessed  the  sum  of 
5  per  centum  on  the  amount  of  the  tax,  plus  interest  of  1  per  cent,  per 
month  to  date  of  payment. 

*By  permission  of  National  Bank  News. 


PROVISIONS   OF   THE   CONSTITUTION   OF   OREGON   RELATING   TO 
THE  INITIATIVE,  REFERENDUM  AND  RECALL. 

Article  IV,  Sec.  I :  The  legislative  authority  of  the  State  shall  be  vested 
in  a  legislative  assembly,  consisting  of  a  senate  and  house  of  representatives, 
but  the  people  reserve  to  themselves  power  to  propose  laws  and  amendments 
to  the  constitution  and  to  enact  or  reject  the  same  at  the  polls,  independent 
of  the  legislative  assembly  and  also  reserve  power  at  their  own  option  to 
approve  or  reject  at  the  polls  any  Act  of  the  legislative  assembly.  The  first 
power  reserved  by  the  people  is  the  initiative,  and  not  more  than  eight  per 
cent,  of  the  legal  voters  shall  be  required  to  propose  any  measure  by  such 
petition,  and  every  such  petition  shall  include  the  full  text  of  the  measure  so 
proposed.  Initiative  petitions  shall  be  filed  with  the  Secretary  of  State  not 
less  than  four  months  before  the  election  at  which  they  are  to  be  voted  upon. 
The  second  power  is  the  referendum,  and  it  may  be  ordered  (except  as  to 
laws  necessary  for  the  immediate  preservation  of  the  public  peace,  health  or 
safety),  either  by  the  petition  signed  by  five  per  cent,  of  the  legal  voters,  or 
by  the  legislative  assembly,  as  other  bills  are  enacted.  Referendum  petitions 
shall  be  filed  with  the  Secretary  of  State  not  more  than  ninety  days  after 
the  final  adjournment  of  the  session  of  the  legislative  assembly  which  passed 
the  bill  on  which  the  referendum  is  demanded.  The  veto  power  of  the  gov- 


shall 
the  fi 
the  b 


35 8  FEDERAL  AND   STATE   STATUTES. 

ernor  shall  not  extend  to  measures  referred  to  the  people.  All  elections  on 
measures  referred  to  the  people  of  the  State  shall  be  had  at  the  biennial 
regular  general  elections,  except  when  the  legislative  assembly  shall  order 
a  special  election.  Any  measure  referred  to  the  people  shall  take  effect  and 
become  the  law  when  it  is  approved  by  a  majority  of  the  votes  cast  thereon, 
and  not  otherwise.  The  style  of  all  bills  shall  be:  "Be  it  enacted  by  the 
people  of  the  State  of  Oregon."  This  section  shall  not  be  construed  to 
deprive  any  member  of  the  legislative  assembly  of  the  right  to  introduce 
any  measure.  The  whole  number  of  votes  cast  for  Justice  of  the  Supreme 
Court  at  the  regular  election  last  preceding  the  filing  of  any  petition  for 
the  initiative  or  for  the  referendum  shall  be  the  basis  on  which  the  number 
of  legal  voters  necessary  to  sign  such  petition  shall  be  counted.  Petitions 
and  orders  for  the  initiative  and  for  the  referendum  shall  be  filed  with  the 
Secretary  of  State,  and  in  submitting  the  same  to  the  people  he,  and  all 
other  officers,  shall  be  guided  by  the  general  laws  and  the  Act  submitting 
this  amendment,  until  legislation  shall  be  especially  provided  therefor. 

Note. — The  above  section  is  an  amendment  to  the  original  Constitution 
of  the  State  of  Oregon  and  was  adopted  by  the  people  by  vote  of  62,024 
for,  to  5,668  against  it,  on  June  2,  1902. 

As  to  Local,  Special,  and  Municipal  Laws,  and  Parts  of  Laws. 

SEC.  la.  The  referendum  may  be  demanded  by  the  people  against  one 
or  more  items,  sections,  or  parts  of  any  Act  of  the  legislative  assembly  in 
the  same  manner  in  which  such  power  may  be  exercised  against  a  complete 
Act.  The  filing  of  a  referendum  petition  against  one  or  more  items,  sec- 
tions, or  parts  of  an  Act  shall  not  delay  the  remainder  of  that  Act  from 
becoming  operative.  The  initiative  and  referendum  powers  reserved  to  the 
people  by  this  Constitution  are  hereby  further  reserved  to  the  legal  voters 
of  every  municipality  and  district,  as  to  all  local,  special,  and .  municipal 
legislation,  of  every  character,  in  or  for  their  respective  municipalities  and 
districts.  The  manner  of  exercising  said  powers  shall  be  prescribed  by 
general  laws,  except  that  cities  and  towns  may  provide  for  the  manner  of 
exercising  the  initiative  and  referendum  powers  as  to  their  municipal 
legislation.  Not  more  than  ten  per  cent,  of  the  legal  voters  may  be  required 
to  order  the  referendum  nor  more  than  fifteen  per  cent,  to  propose  any 
measure,  by  the  initiative,  in  any  city  or  town. 

Note. — The  above  section  was  proposed  by  initiative  petition  filed  on  Feb- 
ruary 3,  1906,  and  adopted  by  vote  of  the  people,  47,678  for,  and  16,735 
against  it,  on  June  4,  1906.  It  went  into  effect  by  proclamation  of  the 
Governor  issued  June  25,  1906. 

Note. — In  1907,  the  Legislature  of  Oregon  passed  an  Act  which  provides 
in  detail  the  form  and  procedure  to  be  followed  in  the  exercise  of  the 
initiative  and  referendum  powers  of  the  people  of  the  State.  (Laws  1907, 
Chapter  226.) 

The  Recall. 

ART.   II.     SEC.    18.     Every  public  officer   in   Oregon   is   subject,   as  herein 


FEDERAL  AND  STATE  STATUTES.         359 

provided,  to  recall  by  the  legal  voters  of  the  State  or  of  the  electoral  district 
from  which  he  is  elected.  There  may  be  required  twenty-five  per  cent., 
but  not  more,  of  the  number  of  electors  who  voted  in  his  district  at  the 
preceding  election  for  Justice  of  the  Supreme  Court  to  file  their  petition 
demanding  his  recall  by  the  people.  They  shall  set  forth  in  said  petition  the 
reasons  for  said  demand.  If  he  shall  offer  his  resignation,  it  shall  be 
accepted  and  take  effect  on  the  day  it  is  offered,  and  the  vacancy  may  be 
filled  as  is  provided  by  law.  If  he  shall  not  resign  within  five  days  after 
the  petition  is  filed,  a  special  election  shall  be  ordered  to  be  held  within 
twenty  days  in  his  said  electoral  district  to  determine  whether  the  people 
will  recall  said  officer.  On  the  sample  ballot  at  said  election  shall  be  printed 
in  not  more  than  two  hundred  words,  the  reasons  for  demanding  the  recall 
of  said  officer  as  set  forth  in  the  recall  petition,  and  in  not  more  than  two 
hundred  words,  the  officer's  justification  of  his  course  in  office.  He  shall 
continue  to  perform  the  duties  of  his  office  until  the  result  of  said  special 
election  shall  be  officially  declared.  Other  candidates  for  the  office  may 
be  nominated  to  be  voted  for  at  said  special  election.  The  candidate  who 
shall  receive  the  highest  number  of  votes  shall  be  deemed  elected  for  the 
remainder  of  the  term,  whether  it  be  the  person  against  whom  the  recall 
petition  was  filed,  or  another.  The  recall  petition  shall  be  filed  with  the 
officer  with  whom  a  petition  for  nomination  to  such  office  should  be  filed, 
and  the  same  officer  shall  order  the  special  election  when  it  is  required. 
No  such  petition  shall  be  circulated  against  any  officer  until  he  has  actually 
held  his  office  six  months,  save  and  except  that  it  may  be  filed  against  a 
Senator  or  Representative  in  the  legislative  assembly  at  any  time  after  five 
days  from  the  beginning  of  the  first  session  after  his  election.  After  one 
such  petition  and  special  election,  no  further  recall  petition  shall  be  filed 
against  the  same  officer  during  the  term  for  which  he  was  elected  unless 
such  further  petitioners  shall  pay  into  the  public  treasury  which  has  paid 
such  special  election  expenses,  the  whole  amount  of  its  expenses  for  the 
preceding  special  election. 


Nbte. — The  foregoing  amendment  to  the  original  Constitution  of  the  State 
was  proposed  by  the  people  by  initiative  petition  and  was  approved  by  a 
vote  of  58,381  for,  and  31,002  against  the  amendment.  It  took  effect  by 
proclamation  of  the  Governor  on  June  23,  1908. 


KANSAS  BLUE  SKY  LAW  OF  1915. 

(The  following  are  the  important  sections.) 

SEC.  2.  It  shall  be  hereafter  unlawful  for  any  person,  copartnership,  asso- 
ciation, or  corporation,  hereinafter  called  the  promoter,  either  as  principal, 
or  through  brokers  or  agents,  to  sell  or  offer  for  sale  or  by  means  of  any 
advertisements,  circulars,  or  prospectus,  or  by  any  other  form  of  public 
offering,  to  attempt  to  promote  the  sale  of  any  speculative  securities  in  this 
State,  unless  there  first  shall  have  been  filed  with  the  bank  commissioner: 
(1)  A  copy  of  the  securities  so  to  be  promoted;  (2)  A  statement  in  sub- 
stantial detail  of  the  assets  and  liabilities  of  the  person  or  company  making 


I 


Return  to 


360          FEDERAL  AND  STATE  STATUTES. 

and  issuing  such  securities  and  of  any  person  or  company  guaranteeing  the 
same,  including  specifically  the  total  amount  of  such  securities  and  of  any 
securities  prior  thereto  in  interest  or  lien,  authorized  or  issued  by  any  such 
person  or  company;  (3)  If  such  securities  are  secured  by  mortgage  or  other 
lien,  a  copy  of  such  mortgage  or  of  the  instrument  creating  such  lien,  and 
a  competent  appraisal  or  valuation  of  the  property  covered  thereby,  with  a 
specific  statement  of  all  prior  liens  thereon  if  any;  (4)  A  full  statement  of 
facts  showing  the  gross  and  net  earnings,  actual  or  estimated,  of  any  person 
or  company  making  and  issuing  or  guaranteeing  such  securities,  or  of  any 
property  covered  by  any  such  mortgage  or  lien;  (5)  All  knowledge  or  in- 
formation in  the  possession  of  such  promoter  relative  to  the  character  or 
value  of  such  securities,  or  of  the  property  or  earning  power  of  the  person 
or  company  making  and  issuing  or  guaranteeing  the  same;  (6)  A  copy  of 
any  general  or  public  prospectus  or  advertising  matter  which  is  to  be  used 
in  connection  with  such  promotion,  and  no  such  prospectus  or  advertising 
matter  shall  be  used  unless  the  same  has  been  filed  hereunder;  (7)  The 
names,  addresses  and  selling  territory  in  this  State  of  any  agents  by  or 
through  whom  any  such  securities  are  to  be  sold,  and  no  such  agents  shall 
be  employed  unless  such  statement  with  respect  to  them  has  been  filed  here- 
under, and  there  shall  have  been  paid  to  the  bank  commissioner  a  registration 
fee  of  one  dollar  for  each  such  agent.  The  payment  of  such  fee  shall  be 
payment  in  full  of  all  fees  for  registration  of  such  agent  until  and  including 
the  first  day  of  March  next  following;  (8)  The  name  and  address  of  such 
promoter,  including  the  names  and  addresses  of  all  partners,  if  the  promoter 
be  a  partnership,  and  the  names  and  addresses  of  the  directors  or  trustees, 
and  of  any  person  owning  ten  per  centum,  or  more,  of  the  capital  stock,  if 
the  promoter  be  a  corporation  or  association ;  (9)  A  statement  showing  in 
detail  the  plan  on  which  the  business  or  enterprise  is  to  be  conducted;  (10) 
The  articles  of  co-partnership  or  association,  and  all  other  papers  pertaining 
to  its  organization,  if  the  securities  be  insured  or  guaranteed  by  a  co-partner- 
ship or  unincorporated  association;  (11)  A  copy  of  its  charter  and  by-laws 
if  the  securities  be  issued  or  guaranteed  by  a  corporation;  (12)  A  filing  fee 
of  twenty-five  ($25.00)  dollars. 

SEC.  4.  It  shall  be  the  duty  of  the  bank  commissioner  as  soon  as  is 
practical,  to  examine  the  statement  and  documents  so  filed,  and  if  said  bank 
commissioner  shall  deem  it  advisable,  he  shall  make,  or  have  made,  a  detailed 
inspection,  examination,  audit  and  investigation  of  the  affairs  of  the  makers 
or  guarantors  of  such  securities  which  said  inspection,  examination,  audit, 
and  investigation  .shall  be  at  the  promoter's  expense.  As  a  part  of  the  afore- 
said inspection,  examination,  audit  and  investigation,  the  bank  commissioner 
may  cause  an  appraisal  to  be  made  of  the  property  of  the  maker  or  guarantor, 
including  the  value  of  patents,  formulae,  good-will,  promotion,  and  intangible 
assets  and  shall  furnish  a  full  and  complete  statement  or  report  of  his  inspec- 
tion and  investigation  aforesaid  to  the  Charter  Board.  The  Charter  Board 
shall,  within  ten  days  thereafter,  examine  the  statements  or  report,  and  give 
the  promoter  a  hearing  if  he  so  desires.  If  the  Charter  Board  finds  no  legal 
objection  to  the  enterprise,  or  securities,  it  shall  direct  the  bank  commis- 
sioner to  note  in  a  book  to  be  kept  for  the  bank  commissioner  for  that  pur- 
pose that  said  person,  co-partnership,  association  or  corporation  has  com- 
plied with  section  2  of  this  Act.  But  if,  from  the  statements,  papers  and 


FEDERAL   AND   STATE   STATUTES.  361 

documents  on  file,  and  the  investigations  and  report  of  the  bank  commis- 
sioner, or  from  other  evidence  submitted,  it  shall  appear,  and  the  Charter 
Board  shall  find  (1)  that  the  makers  or  guarantors  of  said  securities  are 
insolvent,  in  failing  circumstances,  or  are  untrustworthy;  (2)  or  that  the 
promoter's  plan  of  business  is  unfair,  inequitable,  dishonest,  or  fraudulent; 
(3)  or  that  the  promoter's  plan  of  business  does  not  adequately  secure  in- 
vestors against  the  unlawful  dissipation  or  misapplication  of  the  funds  of 
the  enterprise  or  business;  (4)  or  that  the  promoter's  literature  or  advertis- 
ing is  misleading  and  calculated  to  deceive  purchasers  or  investors;  (5)  or 
that  the  securities  offered,  or  to  be  offered,  or  issued,  or  to  be  issued,  in  pay- 
ment for  property,  patents,  formulae,  good-will,  or  promotion  and  intangible 
assets  in  excess  of  the  reasonable  value  thereof;  (6)  or  that  the  enterprise 
or  business  of  the  promoter  is  unlawful  or  against  public  policy;  (7)  or  is 
a  mere  scheme  of  a  promoter  or  promoters  to  get  rich  quick  at  the  expense 
of  the  purchasers  of  the  aforesaid  securities;  the  said  Charter  Board  shall 
reduce  its  said  findings  to  writing  and  attest  the  same  by  the  signature  of 
the  chairman  and  secretary  thereof.  Notice  of  such  finding,  or  findings, 
shall  immediately  be  given  to  the  applicant  by  registered  mail.  And  it  shall 
thereafter  be  unlawful  for  the  promoter  or  any  broker  or  agent  of  said 
promoter  to  sell,  offer  for  sale,  or  by  means  of  any  advertisement,  circular, 
or  prospectus,  or  by  any  other  form  of  public  offering  to  attempt  to  promote 
the  sale  of  any  such  speculative  security  or  securities  in  this  State. 

SEC.  5.  The  Charter  Board  shall  at  any  time  have  the  authority  and  juris- 
diction to  investigate  the  affairs  of  any  speculative  enterprise,  the  securities 
of  which  are  being  sold  or  offered  for  sale  in  this  State,  and  after  giving 
the  promoter  a  hearing,  may  if  the  evidence  warrant,  make  any  of  the  adverse 
findings  enumerated  in  section  4  of  this  Act,  and  it  shall  thereafter  be  un- 
lawful for  any  person,  co-partnership,  association  or  corporation  to  sell, 
offer  for  sale,  or  by  means  of  any  advertisement,  circular,  or  prospectus,  or 
by  any  other  form  of  public  offering  to  attempt  to  promote  the  sale  of  the 
securities  of  such  speculative  enterprise  in  this  State. 

SEC.  9.  The  general  accounts  of  every  person,  co-partnership,  association 
or  corporation,  issuing  or  guaranteeing  any  securities  subject  to  the  pro- 
visions of  this  Act,  shall  be  kept  in  a  business-like  and  intelligent  manner  and 
in  sufficient  detail  so  that  the  bank  commissioner  or  his  authorized  repre- 
sentative can  ascertain  at  any  time  the  financial  condition  of  such  person, 
co-partnership,  association  or  corporation,  and  the  books  of  account  and 
affairs  of  any  such  person,  co-partnership,  association  or  corporation,  shall 
be  subject  to  examination  by  the  said  bank  commissioner  or  upon  his  direc- 
tion by  his  assistants,  accountants  or  examiners,  at  any  time  said  bank  com- 
missioner shall  deem  it  advisable,  and  in  the  same  manner  as  is  now  provided 
for  the  examination  of  State  banks ;  and  such  person,  co-partnership,  associa- 
tion or  corporation  shall  pay  a  fee  for  each  of  such  examinations,  of  not 
to  exceed  fifteen  dollars  ($15.00)  for  each  day  or  fraction  thereof,  plus  the 
actual  traveling  and  hotel  expenses  of  said  bank  commissioner,  assistant, 
accountant,  or  examiner,  that  he  is  absent  from  the  capital  of  the  State  for 
the  purpose  of  making  such  examination.  And  it  is  provided  further,  that 
every  person,  co-partnership,  association  or  corporation  making  or  guarantee- 
ing any  securities  subject  to  the  provisions  of  this  Act,  shall  file  at  the  close 


362         FEDERAL  AND  STATE  STATUTES. 

of  business  December  31st,  March  31st,  June  30th,  and  August  31st,  of  each 
year,  and  at  such  other  times  as  may  be  required  by  the  bank  commissioner, 
a  statement,  certified  by  the  oath  of  some  person  having  actual  knowledge 
of  the  facts  therein  stated,  setting  forth,  in  such  form  as  may  be  prescribed 
by  said  bank  commissioner  the  financial  condition,  amount  of  property  and 
liabilities  of  such  person,  co-partnership,  association  or  corporation  and  such 
other  information  as  said  bank  commissioner  may  require.  Each  statement 
shall  be  accompanied  by  a  filing  fee  of  two  dallars  and  fifty  cents  ($2.50). 
It  shall  be  unlawful  for  any  person,  partnership,  association,  or  corporation 
subject  to  the  provisions  of  this  Act,  failing  or  refusing  to  comply  with  the 
provisions  of  this  section  within  ten  days  after  compliance  is  required,  to 
thereafter  sell  or  offer  for  sale  in  this  State  any  speculative  stock  which  said 
person,  partnership,  association  or  corporation  is  selling  or  offering  for  sale 
in  this  State. 

SEC.  10.  The  bank  commissioner  shall  have  power  upon  reasonable  notice 
either  upon  his  own  initiative  or  upon  complaint  of  any  responsible  person, 
to  make  or  have  made  such  special  inspection  or  investigation  as  he  may  deem 
necessary,  in  connection  with  the  promotion,  sale,  disposal,  or  offering  for 
sale  or  disposal  in  this  State,  of  any  certificates,  shares,  stocks,  bonds,  securi- 
ties, contracts,  or  contracts  or  bonds  for  deeds,  to  determine  whether  the 
same  constitute  a  violation  of  this  Act  or  any  other  statute  of  this  State,  by 
any  individual,  co-partnership,  corporation,  or  association,  promoting,  offer- 
ing, selling  or  pledging  the  same;  and  the  State  bank  commissioner,  his 
assistants  or  deputy  shall  have  the  power  to  issue  subpoenas  and  process 
compelling  the  attendance  of  any  person  and  the  production  of  any  papers  or 
books  for  the  purposes  of  such  investigation  and  examination,  and  shall  have 
power  to  administer  an  oath  to  any  person  whose  testimony  may  be  required 
on  such  examination  or  investigation;  and  any  person  who  shall  refuse  to 
obey  any  such  subpoena  or  make  answer  to  any  competent  and  material  ques- 
tion propounded  to  him  by  the  State  bank  commissioner  shall  upon  convic- 
tion in  any  court  of  competent  jurisdiction  be  deemed  guilty  of  a  misde- 
meanor, and  fined  in  any  sum  not  exceeding  five  hundred  dollars  ($500.00) 
or  be  punished  by  confinement  in  the  county  jail  for  not  more  than  ninety 
days,  or  both  such  fine  and  imprisonment.  Upon  the  conclusion  of  any  such 
investigation,  the  bank  commissioner  may  make  findings  of  fact  touching  the 
matter  or  matters  under  investigation,  and  such  findings  shall  be  prima  facie 
evidence  of  the  truth  of  the  matters  therein  found  by  the  bank  commissioner 
in  any  action,  either  civil  or  criminal,  instituted  under  any  of  the  laws  or 
statutes  of  this  State  against  the  person,  persons,  partnership,  corporation  or 
association.  The  notice  herein  provided  for  may  be  given  by  registered 
letter  mailed  to  the  last  known  address  of  person  or  persons  or  corporations 
to  be  investigated  and  the  bank  commissioner's  certificate  shall  be  sufficient 
evidence  of  such  notice  and  the  mailing  thereof. 


FEDERAL  AND  STATE  STATUTES.         363 

MARYLAND  JIM  CEOW  LAW  OF  1904. 

SECTION  1.  Be  it  enacted  by  the  General  Assembly  of  Maryland,  That 
all  railroad  companies  and  corporations,  and  all'  persons  running  or  operating 
cars  or  coaches  by  steam  on  any  railroad  line  or  track  in  the  State  of 
Maryland,  for  the  transportation  of  passengers,  are  hereby  required  to 
provide  separate  cars  or  coaches  for  the  travel  and  transportation  of  the 
white  and  colored  passengers  on  their  respective  lines  of  railroad;  and 
each  compartment  of  a  car  or  coach,  divided  by  a  good  and  substantial 
partition,  with  a  door  or  place  of  exit  from  each  division,  shall  be  deemed 
a  separate  car  or  coach  within  the  meaning  of  this  Act,  and  each  separate 
car,  coach  or  compartment  shall  bear  in  some  conspicuous  place  appropriate 
words,  in  plain  letters,  indicating  whether  it  is  set  apart  for  white  or 
colored  passengers. 

SEC.  2.  And  be  it  enacted,  That  the  railroad  companies  and  corporations 
and  persons  aforesaid  shall  make  no  difference  or  discrimination  in  quality 
of  or  convenience  or  accommodation  in  the  cars,  coaches  or  compartments 
set  apart  for  white  and  colored  passengers. 

SEC.  7.  And  be  it  enacted,  That  the  provisions  of  this  Act  shall  not 
apply  to  employees  of  railroads,  or  to  persons  employed  as  nurses,  or  to 
officers  in  charge  of  prisoners,  whether  the  said  prisoners  are  white  or 
colored,  or  both  white  and  colored,  or  to  the  prisoners  in  their  custody,  nor 
shall  the  same  apply  to  the  transportation  of  passengers  in  any  caboose  car 
attached  to  a  freight  train,  nor  to  parlor  nor  sleeping  cars,  nor  through 
express  trains  that  do  no  local  business. 

Note.— In  Hart  vs.  Maryland,  100  Maryland,  595  (1905)  it  was  held 
that  this  statute,  insofar  as  it  relates  to  interstate  passengers  is  unconstitu- 
tional, because  it  is  an  exercise  of  the  state  police  power  involving  a  regula- 
tion of  commerce  between  the  States  in  a  matter  in  which  the  power  of 
Congress  is  exclusive,  but  the  statute  was  held  to  be  valid  insofar  as  it 
applies  to  passengers  whose  journeys  begin  and  end  within  the  State,  and 
that  it  must  be  construed  as  applying  only  to  such  passengers. 


